Bridging loans: buying next before the old one sells

Swapping homes is rarely as simple as A to B. Usually a gap opens. You found your next home and won the bidding. But your old one is unsold, and the money you counted on sits stuck in the walls.

This is where a bridging loan (överbryggningslån) steps in. The loan finances the new home until the old one is sold and handed over. Many call it brygglån, since it bridges the gap.

What is a bridging loan?

A bridging loan is short credit. It covers the time between buying new and being paid for the old.

Security is your old home. The bank lends against its value, minus loans you already hold on it. Loan size depends on what the bank judges the home worth and sellable for.

The loan is temporary. Term is short, usually months. You repay the whole amount once your old home is sold. So no ordinary mortgage amortised over years. A bridging loan is usually amortisation-free while held. The basic answer to what a bridging loan is sits on a page of its own.

What does a bridging loan cost?

Rates run higher than ordinary mortgages. That is the price of not waiting. How much higher depends on bank and market, so ask your own bank what they charge.

Beyond interest, fees may come, for example for setting the loan up. Ask for a clear summary before signing.

The big question is time. Selling fast keeps cost small. A dragging sale grows it. So hold a realistic plan, preferably a buffer if it takes longer than hoped.

What does the bank require?

Banks are careful with bridging loans. They want to see a genuine move, not speculation.

Usually you need a binding purchase contract on the new home. The bank also wants to judge your old home actually sellable, and at what price. Hard to sell means tougher loan odds.

Note you carry two loans at once for a period. So the bank checks closely that you handle interest if the sale drags. Count on stricter testing than an ordinary mortgage.

Alternatives to bridging loans

Bridging loans are not the only way. Some condition the new home’s purchase on the old one selling first. That brings safety, but can weaken your bid with several fighting over the same place.

Others sell first and rent temporarily while hunting new. Then you skip the bridging loan entirely, but live with an uncertain interim.

On SökHem you register a buying brief and actively hunt the next home while selling. The system finds sellers for you, even ones who never listed openly. That eases making the timing meet, sometimes skipping the bridging loan entirely.

When does a bridging loan fit?

A bridging loan fits when you must act fast on a new home, but the old one is unsold. Perhaps the market moves quickly, perhaps the right place appeared. Then no stress-selling just to free money.

With good control of your finances, a sane valuation of your current home, and a bank on board? Then the bridging loan can be exactly what makes the move flow.