Bridge financing

Definition

A temporary loan that lets you buy a property before the money from selling another one arrives. It covers the gap between the purchase closing date and the sale date, and it is repaid from the sale proceeds. It requires specific dates, a sale that is already concluded or firmly committed, and fees that add to the cost of the transaction. Example: purchase closes June 15, the old property’s sale closes July 15, with $80,000 of down payment to advance: the bridge covers that month, and its interest and fees are added to your budget. If the sale drags on, the cost rises every week.