A bridge mortgage, also known as a bridge loan or bridge financing, is a short-term loan that helps homeowners or real estate investors bridge the gap between the purchase of a new property and the sale of an existing one. Here’s a brief description of bridge mortgages:

1. **Short-Term Financing:** Bridge mortgages are designed to provide short-term financing solutions, typically ranging from a few months to a year or more. They serve as a temporary bridge to help borrowers transition from one property to another.

2. **Scenario:** Bridge loans are commonly used when a homeowner wants to buy a new home before selling their current one. It allows them to access funds to make the new purchase while their existing property is still on the market.

3. **Flexibility:** Bridge loans offer flexibility, allowing borrowers to access funds quickly to secure a new property. This can be particularly beneficial in competitive real estate markets where timing is crucial.

4. **Interest Rates:** Bridge mortgage interest rates are typically higher than those of traditional mortgages because of the short-term nature and increased risk associated with the loan. However, they provide a convenient financing option when needed.

5. **Loan Amount:** The loan amount for a bridge mortgage is often based on the equity in the existing property, which serves as collateral for the loan. Lenders may lend a percentage of the home’s appraised value minus the outstanding mortgage balance.

6. **Exit Strategy:** Borrowers must have a clear exit strategy for repaying the bridge loan. This usually involves selling the existing property within the bridge loan term or refinancing with a long-term mortgage.

7. **Bridge to Sale:** Bridge loans are commonly used when homeowners have found their new dream home but have not yet sold their current property. The loan helps them make a down payment on the new home without waiting for the sale of the old one.

8. **Real Estate Investors:** Real estate investors often use bridge financing to secure investment properties quickly, renovate them, and then either sell or refinance with traditional financing.

9. **Risks and Costs:** Bridge loans can be costly due to higher interest rates and fees. Borrowers should carefully consider the financial implications and costs associated with bridge financing.

10. **Lender Requirements:** Lenders may have specific criteria for bridge loans, including creditworthiness, property value, and a clear plan for repayment. Borrowers should be prepared to meet these requirements.

11. **Loan Term Extension:** In some cases, bridge loan terms can be extended, but this may come with additional costs and fees.

Bridge mortgages can be a valuable tool for borrowers who need short-term financing to facilitate property transactions. However, borrowers should carefully assess their financial situation, timing, and exit strategy to ensure that a bridge loan aligns with their specific needs and goals.