You just got offered your dream job and are moving to a new state soon. You put your house up for sale but found a new one you love before selling your old one. Now, you need the money from selling your old house to buy a new one.

But your old house hasn’t sold yet, and you are starting to worry. Don’t panic. A bridge loan can help you in this situation, but there are also alternatives to bridge loans that work as a plan B. Let’s Discuss them in detail.

  1. Second-Charge Mortgage
    Instead of getting a bridging loan, you can consider a second-charge mortgage. With this loan, you use the equity in your home as security to borrow more money. You can have it alongside your existing mortgage.
    Second-charge mortgages usually have longer repayment periods, which can be helpful if you want more time to repay your debt. You can use the extra money for home improvements, buying another property, or personal expenses like weddings.
    The benefit of a second-charge mortgage over refinancing is that you can keep your current mortgage deal. So, if you are already on a good fixed rate, you don’t have to switch to a higher one.
  2. Equity Release
    If you own a home and want to access some of the money tied up in it without borrowing more, equity release might help. It lets you take out a portion of your home’s value without making monthly repayments.
    Instead, you pay back the loan when you sell your home, usually when you move to long-term care or pass away. Equity release can be handy for retirees or anyone needing extra cash.
    Unlike other types of loans, the interest on an equity release mortgage adds up over time and is paid when you sell your home. It’s a good idea to talk to a seasoned mortgage broker to learn more about your options. They can explain the choices, help with your application, and find the best deal.
  3. Remortgaging
    Another option to consider is remortgaging. This means switching your current mortgage to a new lender or changing the terms with your current one. By doing this, you can access a lot of money, sometimes even more than with a bridging loan. But it can take longer, usually about a month or two, than getting a bridging loan, which is quicker.
    If you need things to move quickly, a bridge loan might be better. Plus, you can switch from a bridge loan to a mortgage later if you need a longer-term solution. Just remember that there are extra costs like arrangement fees, valuations, legal fees, and maybe early repayment charges, so ensure to add them up to see the total cost of remortgage.
  4. Personal Loans
    If you need money but don’t want to use a bridge loan, a personal loan could be another choice. They are usually available for smaller amounts, up to $31,000, and you don’t need to offer anything as security. They are easy to get from banks or private lenders.
    With a personal loan, you borrow the money and then pay it back with interest and any fees over a set time. Remember, the longer you take to pay back, the more interest you’ll have to pay. Personal loans can be used for different things, like combining debts or fixing up your home, and lenders might not be too strict about what you use them for.
    However, they often have higher interest rates and limits on how much you can borrow. A personal loan could be a good option if you need money quickly and want something flexible.
  5. Family Support
    Instead of getting a loan, you could use the savings you have saved up over time. You might also consider asking a family member or a close friend for help. This can be a good option because you won’t have to pay any interest or fees like you would with a loan.
    But remember, borrowing money from someone close to you can sometimes complicate things.

Ending Note

Think about what you want to achieve with your money, how much risk you are comfortable with, and when you need the funds. This will help you choose the best option for you. Do your homework and talk to a finance expert to find the smartest alternatives to bridge loans.

At Red Door Funding, we work with various lenders to determine what kind of financing you need and find a fast solution. Dial (832) 539-1099 for an expert consultation.

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