One example of how a bridge loan can be used is when an individual needs to pay for residential or assisted living costs while waiting to be approved for long-term funding such as veteran pension benefits, an insurance plan payout or the sale of a home. In other words, bridge loans are short-term loans designed to provide quick funding to help cover a cost before individuals can find more permanent, long-term funding.
Bridge loans vary based on the vendor. A lending institution may limit what the funds can be used for. They’re also typically more expensive than other loans but have shorter approval times, helping seniors access their funds faster. The loans are provided either as a lump sum or a line of credit, depending on the lending institution.
When Bridge Loans Can Be Used
Bridge loans can be helpful for seniors who require immediate care but aren’t able to afford it. For example, moving into an assisted living facility can be costly, requiring monthly fees, entrance fees or relocation expenses. Instead of delaying care, a short-term loan can absorb the costs while the family waits for other funding to become available.
Situations outside of senior care may also qualify for a bridge loan. For seniors trying to downsize their homes or move closer to family, a short-term loan can provide funding for a down payment on a new home before their existing one is sold. Once the original property is purchased, the profits can be used to pay off the bridge loan.
Lenders That Offer Bridge Loans
There are three lenders that offer quality bridge loans for seniors. Loan size, payment policies and approval times vary based on the lender and type of bridge loan requested:
- ElderLife Financial: Provides short-term funds for up to 12 months and allows borrowers to receive between $5,000 to $500,000 in loans. Funds may be available in as little as 24 hours and can be requested as a line of credit or lump sum.
- Second Act: Available as a home equity line of credit or an unsecured veterans bridge loan, borrowers can request up to 75% of their home value, or up to $25,000. Approval times vary between 1 and 10 days, depending on the loan requested, and repayment plans range from 18 to 60 months for interest-only payments.
- Care Planning Institute: Offers a line of credit that covers up to five months of in-home care. Funding becomes available once the application is mailed to the VA. No interest is due, but the loan must be repaid within 15 days of being approved for VA benefits.
