If you have made the decision to move yourself or a loved one to a senior living community but are facing a cash flow shortage, a short-term bridge loan might provide you with the financial flexibility you need to act quickly—instead of waiting for other funds to become available.
What is a bridge loan and how does It work?
A bridge loan is exactly that: a short-term loan that bridges the gap between lapses in funding. Most loans are provided as a line of credit but can be provided as a lump sum.
A bridge loan can provide a quick solution to those who need a source of capital during a transitional period, such as before you are able to sell your home and use the proceeds for a move to senior living. Instead, with a bridge loan, a bank or finance company may loan a homeowner money on an asset (usually the home), and the loan is then paid off once the asset is sold or liquidated.
When is a bridge loan a good choice?
- Before VA benefits begin. Families may have to wait a year or more to begin receiving benefits.
- During a long-term care insurance policy waiting period. These benefits may not begin for a year.
- During the time it takes to sell a house and receive the proceeds. It can take months to downsize, make repairs and upgrades, put your home on the market, get the best price, and close the sale.
- Before an annuity matures.
- Before other assets or investments can be liquidated.
- As an alternative to a reverse mortgage. A reverse mortgage is a good option for financing long-term care if at least one homeowner remains in the home. But should both owners of the home need to move into assisted living, a reverse mortgage is not possible. In addition, a reverse mortgage is geared toward a longer time period, whereas a bridge loan is designed to cover short-term needs.
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Benefits of a bridge loan
- You gain breathing room and time to sell your home on your own terms. It’s also easier to stage, show and sell your home if you are not living in it.
- You can pay for senior housing now, while you wait for benefits to arrive. This can be especially helpful when the need for supportive care is urgent, or you have decided upon a particular senior living community and your preferred residence is available.
- If you will be residing in a senior living community in another town, a bridge loan can help with the costs of moving.
- Many communities may offer their own promotions that could help offset financing costs.
- The approval process for a short-term bridge loan can be as speedy as 24 hours.
Because this is a Home Equity Line of Credit (HELOC) bridge loan, the interest and fees may be tax deductible. Consult your tax advisor or CPA for details.
Considerations to keep in mind
- You must have equity in your home to quality for a bridge loan.
- Applicants may have a one-time low origination fee that will be added to the loan.
With a bridge loan, you don’t have to wait to enjoy the benefits of senior living. There’s a lot to be said about giving yourself, or a loved one, a carefree, extraordinary lifestyle—and with a bridge loan, you don’t have to put it off for months or longer.
Choosing St. Mark Village gives you access to a full continuum of care: independent living, assisted living, memory care, skilled nursing, and in-patient rehabilitation. No matter where you reside in our community, you benefit from the support, focus on total wellness, and strong social network that can lead to increased longevity. Plus, you have a plan that offers seamless access to future care options, something both you and your family can appreciate.
For details on how you can finance your senior living community entrance fee or monthly service fees, visit our funding partner, Second Act Financial, here.