Bridge Loan vs Home Equity Loan: Which One Gets You Into Your Next Home?
A home equity loan hands you a lump sum at a fixed rate. A bridge loan hands you a lump sum for a few months while you sell. Both can fund a down payment on another house, but they behave very differently on the calendar. AFC offers both in Connecticut, plus cash-out refinancing, so here's the honest breakdown.
Short version
If you have 30 to 45 days before you need the money and you plan to keep your current home (or won't list it for a while), a home equity loan is the cheaper, fixed-rate choice. If you're selling the current home within the year and need to close on the new one fast, a bridge loan is built for exactly that: it closes in about 10 days, requires no monthly payment while you sell, and is paid off from your sale proceeds.
- Home equity loan: fixed rate, 30 to 45 days to fund, a new monthly payment for years unless you pay it off at sale
- Bridge: about 10 days to close, interest accrues instead of being paid monthly, up to 12 months to sell
- Cash-out refinance: replaces your whole first mortgage at today's rate, 30 to 45 days
No obligation and no credit pull to compare the three side by side.
See What You'd Qualify For
No SSN · No hard credit pull · ~2 minutes · NMLS #2801
Prefer to text? Tap to text our teamBridge Loan vs Home Equity Loan vs Cash-Out Refinance
| Compare | Bridge loan (AFC) | Home equity loan | Cash-out refinance |
|---|---|---|---|
| Speed to funding | As little as 10 days. | Typically 30 to 45 days, including appraisal and a three-day rescission wait. | Typically 30 to 45 days; full underwriting of a new first mortgage. |
| Cost | 2.5% origination, 1% per month accruing interest, about $3,000 in fees. No prepayment penalty. | Fixed rate, usually above first-mortgage rates. Closing costs vary by lender; some offer low-cost options. | Closing costs of roughly 2% to 3% of the new loan, and you give up your current first-mortgage rate. |
| Payment while you sell | None out of pocket; interest is settled at payoff. | Fixed principal-and-interest payment starts right away and continues for the term (often 5 to 30 years) unless paid off at sale. | One new, larger first-mortgage payment replaces your old one. |
| Can you get it on a home you're listing? | Yes. That is what it's for. | Usually not once listed; lenders want a home you intend to keep. | Usually not once listed, and it rarely makes sense to reset a 30-year loan on a home you're selling. |
| If your home doesn't sell right away | Up to 12 months; we work the plan with you. | No deadline, but you carry the fixed payment plus both mortgages. | No deadline, but you've refinanced a home you still need to sell. |
| Who you're dealing with | One local Approval Team that holds the bridge and writes your new mortgage. | Any lender; often a bank separate from your purchase lender. | Your refinance lender, then your purchase lender, two full approvals. |
Home equity loan and refinance terms vary by lender. AFC offers all three; the rows describe each product generally.
When a Home Equity Loan Wins vs When a Bridge Loan Wins
A home equity loan wins when...
- You're keeping your current home, for example turning it into a rental, so there's no sale to pay the loan off
- You have 30 to 45 days before you need the funds and haven't listed yet
- You want a fixed rate and a predictable payment for the long haul
- Your debt-to-income can absorb a second fixed payment on top of two mortgages
A bridge loan wins when...
- You're selling the current home within the next 12 months and the sale is the exit
- You need to close in about 10 days or write a non-contingent offer this week
- You don't want a new monthly payment while you carry two homes
- Your home is already listed or under contract, which rules out most equity loans
A Worked Example From Fairfield County
Same scenario we use across these pages: a $650,000 home in Fairfield with a $300,000 balance, buying an $850,000 home in Trumbull with $200,000 down. The new mortgage is $650,000, about $4,108 a month at an illustrative 6.5%. Your old home sells three months after you close on the new one.
| Line item | Bridge loan | Home equity loan (15-year fixed) |
|---|---|---|
| Amount borrowed | $200,000 | $200,000 |
| Upfront cost | $5,000 origination + about $3,000 fees | Lender-dependent; often $0 to $3,000 |
| Payment while you sell | $0 per month (interest accrues) | About $1,911 per month at an illustrative 8.0% fixed |
| Cost over 3 months | $6,000 interest + $8,000 upfront = about $14,000 | About $4,000 interest + $5,700 in payments made (mostly interest) + closing costs |
| What happens at the sale | Bridge is paid off from proceeds; done. | You can pay it off from proceeds (check for any early-payoff fee), or keep paying for up to 15 years. |
| Time to funding | About 10 days | 30 to 45 days, before listing |
Over a three-month overlap the equity loan is the cheaper product, but only if it was opened before listing and the extra $1,911 a month didn't break your qualification on the new mortgage. The bridge costs more and asks nothing of you month to month, which is why it's the tool for tight timelines. A cash-out refinance would fund the same $200,000 but would replace your $300,000 mortgage with a new $500,000 loan at today's rate on a home you're about to sell, which rarely pencils out.
Illustrative only. Uses a $650,000 current home with a $300,000 mortgage balance, an $850,000 purchase, an illustrative 6.5% 30-year fixed rate on the new mortgage, and AFC's representative bridge terms (2.5% origination, 1% per month accruing interest, about $3,000 in attorney, processing, and wire fees). HELOC and home equity loan figures use an illustrative 8.0% rate. Your rate, fees, and eligibility depend on credit, equity, and market conditions. Not a commitment to lend.
How AFC Handles It
We write bridge loans, home equity loans, HELOCs, and cash-out refinances, so we have no product to protect. Our Approval Team lays out all three with your real numbers and tells you which one is cheapest for your timeline.
- We are a retail lender, not a broker. Our Approval Team underwrites and closes in our own name, right here in Connecticut. You talk to the same people from first call to settlement.
- We lend our own money on bridge loans. No outside bank has to sign off, which is why we can close in as little as 10 days and give you up to 12 months to sell.
- No prepayment penalty, no minimum interest. Interest accrues only while the loan is open and is settled at payoff, so nothing is due out of pocket month to month.
- Your pre-approval never expires. As long as your income, assets, and credit are unchanged, it stays valid, so you can shop without a clock running.
- Bridge plus permanent financing in one place. The same team that funds your bridge writes the new mortgage, so there's one set of conditions and one Green Light, not two.
★★★★★ 4.9 · 444 Google Reviews · Family-owned Connecticut lender since 1998 · NMLS #2801 · Equal Housing Lender
Bridge Loan vs Home Equity Loan: Frequently Asked Questions
Can I use a home equity loan to buy another house?
What's the main difference between a bridge loan and a home equity loan?
Is a cash-out refinance a good way to fund a down payment on a second home?
How long does each option take?
Can I pay off a home equity loan early when my house sells?
Which one affects my qualification on the new mortgage less?
Compare All Three With Your Real Numbers
Two minutes, no SSN, no hard credit pull. We'll show you the bridge, the home equity loan, and the refinance side by side and tell you which one is cheapest for your timeline.
See What You'd Qualify For
