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Buying a new property while still owning your current one often creates timing challenges that can delay important decisions. An owner-occupied bridge loan offers short-term financing that covers this gap and allows a smoother move without waiting for the sale of your existing home.
What is an Owner-Occupied Bridge Loan?
Here’s a simple explanation!
- A short-term loan used for purchasing a new primary residence
- It’s supported by equity in your current home
- Gives buyers access to funds before their home sells
- Helps create a non-contingent offer
- Designed for repayment once you close on the “new” primary home
This type of financing helps buyers move forward when their equity is not yet liquid.
A Common Owner-Occupied Bridge Loan Scenario
The structure is practical and direct:
- A borrower identifies a new property but needs cash to proceed.
- The lender evaluates available equity in the current home.
- A short-term loan is secured using the existing home as collateral.
- The borrower closes on the new property then sells the existing home.
- Borrower uses the proceeds from the sale of the existing home to pay off the loan.
The purpose is to remove delays related to liquidity and timing.
Eligibility Requirements
Lenders review several core areas when qualifying borrowers:
- Equity strength: Enough equity must be available in the current primary residence.
- Financial profile: Income sources and credit history are reviewed for short-term stability.
- Property type: The current home must qualify as an owner-occupied property or primary residence.
- Exit plan: Lenders look for a clear repayment strategy through a sale or refinance.
These requirements help confirm that the loan aligns with the borrower’s goals.
Advantages of an Owner-Occupied Bridge Loan
Many borrowers find these loans helpful because they provide:
- Immediate access to equity: Funds become available without waiting for a sale.
- Stronger offers: Ability to avoid a home sale contingencies.
- Simplified timing: Reduces the need for temporary moves or storage.
- Faster decision-making: Helps buyers act quickly when opportunities arise.
- Flexible repayment structure: Designed for short-term use with repayment after the sale.
These benefits support a smoother transition into the new property.
Typical Costs
Costs vary by lender program, but may include the following:
- Origination or processing fees
- Interest-only payments or deferred interest
- Administrative fees associated with short-term funding
While most private lending rates may be higher than traditional bank loans. The pricing reflects the speed and flexibility of this type of loan.
Timeline for Approval and Funding
Owner-occupied bridge loans are known for efficiency. Timelines commonly include:
- Initial discussion: Early overview of goals and property details
- Document review: Quick property and borrower verification. Timelines may vary subject to third-party reports such as the appraisal turnaround time.
- Approval: Often faster than conventional mortgage approvals
- Closing: Coordinated with the purchase timeline of the new property
Why Choose Red Tower Capital?
Homebuyers seeking short-term real estate financing value lenders with experience, reliable execution, and transparent loan structures. With a long history of providing bridge loans and private real estate lending solutions, Red Tower Capital offers disciplined underwriting, efficient funding timelines, and a commitment to clear communication. Borrowers and investors who want a dependable lending partner can learn more about current opportunities at Red Tower Capital.