Exactly as a mortgage is actually backed by our home one to you buy on the currency, bridge loans have to be backed by equity to guard the brand new lender’s position. Inside real estate, widely known supply of equity ‘s the customer’s existing home.
Instance, for people who bought a separate domestic and you may grabbed away a link loan to cover mortgage on the established household, your own connection financing would-be backed by your current household. When you to home is ended up selling therefore romantic inside it, the fresh proceeds from the brand new closure will be regularly pay the fresh connection mortgage.
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