Yes, banks do offer bridging loans, but not all of them, and the terms vary widely

A bridging loan is a short-term loan that covers the gap between buying a new property and selling an old one. Banks, mortgage lenders, and specialist bridging firms all offer them. The loan is typically repaid within 3 to 12 months, either from the proceeds of your home sale or through refinancing into a standard mortgage. Banks treat bridging differently than regular mortgages — the rates are higher, the approval process is faster, and the lender takes on more risk because the loan sits on top of your existing mortgage debt.

Not every bank offers bridging loans. Large national banks like Chase, Bank of America, and Wells Fargo do not advertise them as a standard product. Smaller regional banks and mortgage lenders are more likely to have them. Specialist bridging firms — companies that do nothing but bridging loans — are often easier to work with if your situation is complicated, though their rates tend to be higher than a bank's would be.

Key Takeaways

  • Bridging loans are short-term loans meant to last 3 to 12 months, designed to cover the gap between buying a new home and selling your current one.
  • Banks that offer bridging loans charge higher interest rates than standard mortgages because the loan is temporary and carries more risk.
  • Specialist bridging lenders are easier to find than banks for bridging loans, but they typically charge even higher rates and fees.
  • Your lender will want proof that you have a buyer for your current home or a concrete plan to sell it within the loan term.
  • Bridging loans are not the same as home equity lines of credit or cash-out refinances, which are different ways to borrow against your home.

How banks structure a bridging loan

When a bank offers a bridging loan, it lends you money based on the equity in your current home, not on the sale price of the new one you are buying. The bank will order an appraisal of your current home and calculate how much you can borrow — typically 80% of the home's value minus what you still owe on the mortgage. If your home is worth $400,000 and you owe $250,000, the bank might lend you up to $70,000 (80% of $400,000 is $320,000, minus $250,000 owed equals $70,000 available).

The interest rate on a bridging loan is usually 1 to 3 percentage points higher than your current mortgage rate, sometimes more. A bank charging 7% on a standard mortgage might charge 9% to 10% on a bridging loan. You pay interest only during the bridging period — you do not make principal payments — so your monthly cost is lower than it would be on a traditional loan, but the total interest adds up quickly over even a few months.

Banks also charge fees: an origination fee (typically 1% to 2% of the loan amount), an appraisal fee ($400 to $800), and sometimes a title search or underwriting fee. Some lenders charge an exit fee if you pay off the loan early. These fees are separate from the interest and can add $2,000 to $5,000 to the total cost of the loan.

What banks want to see before they will lend

A bank will not hand you a bridging loan without proof that you have a real plan to repay it. The most common proof is a signed purchase agreement on your new home and a signed listing agreement on your current home, showing that it is on the market. Some banks will lend on the strength of a purchase agreement alone if your current home is already under contract to sell.

The bank will order an appraisal of your current home to confirm its value. It will also pull your credit report and verify your income, just as it would for any mortgage. If you have a poor credit score or unstable income, a bank may decline the loan or charge a higher rate. Some banks have a minimum credit score requirement — often 680 or higher — though specialist lenders may go lower.

You will need to show that you can cover the monthly interest payments on the bridging loan plus your existing mortgage payment while you wait for your home to sell. If the bank thinks you cannot afford both, it will decline. This is where many borrowers run into trouble: they can afford one mortgage, but not two at the same time.

Bridging loans versus other ways to borrow against your home

A bridging loan is not the same as a home equity line of credit (HELOC) or a cash-out refinance, even though all three let you borrow money using your home as collateral. A HELOC is a revolving credit line — you draw money as you need it, pay interest only on what you use, and can repay and redraw over many years. A cash-out refinance replaces your entire mortgage with a new, larger one and gives you the difference in cash. Both are meant to be long-term borrowing.

A bridging loan is explicitly short-term. The lender expects you to repay it within a set period, usually by selling your home or refinancing into a standard mortgage. If you cannot repay within that time, the lender can foreclose. A HELOC or cash-out refinance gives you much more flexibility about when and how you repay.

For someone who needs money quickly to buy a new home before their old one sells, a bridging loan is the right tool. For someone who wants to tap home equity for a renovation or debt consolidation and does not have a time pressure, a HELOC or refinance is usually cheaper and simpler.

Where to find a bank or lender that offers bridging loans

Start by calling your current mortgage lender or bank. Ask whether they offer bridging loans and, if so, what their rates and fees are. Many regional banks and credit unions do offer them, even if they do not advertise them heavily. Your real estate agent may also know which lenders in your area specialize in bridging.

If your bank does not offer bridging loans, search online for "bridging loan lenders" or "bridge financing" in your state. Specialist bridging firms will appear — companies like LendingClub, Patch of Land, or regional firms that focus on real estate investors and homebuyers. Get quotes from at least two or three lenders. Compare the interest rate, the fees, the loan term, and any prepayment penalties.

Be cautious of lenders that pressure you to decide quickly or that charge fees upfront before you have signed a loan agreement. Legitimate lenders will give you a Loan Estimate within three business days of your application, showing all costs in writing. Review it carefully and ask questions about anything you do not understand.

What happens if your home does not sell in time

If your home does not sell before the bridging loan term ends, you have a few options. The most common is to refinance the bridging loan into a standard mortgage or a new bridging loan with a longer term. This means you will owe money on both your new home and your old one indefinitely, which is expensive and stressful.

Some lenders will extend the bridging loan term if you ask before the original term expires. This usually costs an additional fee and a higher interest rate for the extension period. Other lenders will not extend and will demand full repayment, which forces you to refinance or sell quickly.

The best protection is to price your home competitively and list it before you buy the new one, if possible. If you must buy first, make sure the bridging loan term is long enough to give your home a realistic chance to sell. A 6-month term in a slow market is not enough; a 12-month term is safer.

Frequently Asked Questions

Can I get a bridging loan if I have not found a buyer for my current home yet?

Some lenders will lend if your home is listed and actively on the market, even without an offer. Others require a signed purchase agreement or at least a signed listing agreement showing the home is for sale. A few specialist lenders will lend on equity alone, but they charge much higher rates. Ask the lender upfront what proof of sale they need.

What is the difference between a bridging loan and a personal loan?

A personal loan is unsecured — the lender has no claim on your home if you do not repay. A bridging loan is secured by your home, so the lender can foreclose if you default. Bridging loans are cheaper because the lender's risk is lower, but the consequence of not repaying is much more serious.

How long does it take to get a bridging loan approved?

Bridging loans typically close in 7 to 14 days, much faster than a standard mortgage. The lender will order an appraisal and pull your credit report, but because the loan is short-term and the lender is taking less risk on the new home purchase, the underwriting is simpler. Specialist lenders sometimes close in as little as 3 to 5 days.

Do I have to pay back the entire bridging loan at once?

Yes. A bridging loan is meant to be repaid in full when your home sells or when the loan term ends, whichever comes first. You do not make monthly principal payments during the loan term — only interest. When the loan ends, the full balance is due.

Will getting a bridging loan hurt my credit score?

A bridging loan will cause a small, temporary dip in your credit score when the lender pulls your credit report. Your score may drop further if the new loan increases your total debt load significantly. However, if you repay the bridging loan on time when your home sells, your score will recover within a few months.