The first time most people see a bridge loan quote, they have the same reaction: why is this rate so much higher than my mortgage?
It's a fair question. But it's also the wrong one to stop at. A bridge loan and a 30-year mortgage are two different tools doing two different jobs, and comparing their rates side by side tells you almost nothing about what you'll actually spend.
Here's what the rate really means, what else goes into the bill, and how to figure your own number before you ever sit down with a Loan Officer.
The short version: A bridge loan's rate is higher than a 30-year mortgage because it's short-term, fast, and secured by equity. But your real cost is interest for the weeks you actually hold it, plus points and closing costs, not the annual rate. A bridge loan paid off in two months costs a small fraction of what the rate alone suggests.
A bridge loan is short-term money. At AFC, the term is 12 months, and most homeowners pay it off long before that, usually the day their old house closes.
A few things push the price above a standard mortgage:
So yes, the rate is higher. But the rate is attached to a loan you're holding for weeks or a few months, not 360 payments. That changes everything.
When people ask "what's the rate?", they're usually trying to ask "what will this cost me?" Those are not the same question. Three things decide your total:
This is what you pay for the money, expressed as a yearly percentage. On a bridge loan it's almost always interest-only. You're not paying down principal, so your payment is just the interest on the balance.
A point is one percent of the loan amount, paid at closing. Two points on a $200,000 bridge loan is $4,000. Points are a real part of your cost, and on a short-term loan they can matter more than the rate, because you're paying them once no matter how briefly you hold the loan.
On top of points, expect the normal closing line items: an appraisal, title work, recording fees, and, in Connecticut, attorney fees, since CT is an attorney closing state. These are third-party costs, not lender profit, but they're money out of your pocket.
This is the number almost nobody talks about, and it's the one with the biggest swing. A bridge loan held for six weeks costs a fraction of the same loan held for six months. Your listing price, your agent, and your local market do more to control your bridge loan cost than the rate does.
Once you have a quote in hand, the math is simple enough to do on your phone.
Step one: one month of interest. Take the loan amount, multiply by your quoted rate as a decimal, then divide by 12.
On a $200,000 bridge loan, that's: 200,000 × (your rate ÷ 100) ÷ 12 = one month of interest.
Step two: multiply by your realistic timeline. Not your optimistic one. Look at how long homes like yours are actually sitting in your town, then add a few weeks of cushion.
Step three: add the one-time costs. Points plus appraisal, title, attorney, and recording.
That sum, interest for your real holding period plus one-time costs, is the actual price of buying your next house before you sell this one. It's usually a much smaller, much less scary number than the rate alone suggests.
Bridge pricing isn't one-size-fits-all. Here's what a lender is looking at:
At AFC, interest accrues and is paid off at your sale closing. There's no monthly payment during the bridge. Some lenders structure it differently and require a monthly interest payment, so if you're comparing quotes, ask.
Deferred interest is a real help with cash flow. You're not carrying two mortgage payments plus a third loan while you move. But understand that you're still paying it; it just shows up all at once at the end. Build that payoff into your net-proceeds math so there are no surprises at the closing table.
Homeowners tend to compare a bridge loan rate to their mortgage rate and wince. That's not the right comparison.
The right one is: what does it cost you to not have the bridge loan?
That might mean writing an offer with a home-sale contingency in a market where sellers won't look at one. It might mean selling first, then renting, then moving twice: deposit, storage, movers, and a rental payment for several months. It might mean losing the house you actually wanted and settling for the next one.
Run those numbers honestly. A bridge loan held for eight or ten weeks often costs less than a double move, and it's certainly cheaper than losing the home.
If you'd rather skip the loan entirely, there's another route worth pricing out: a cash offer program, where you make a non-contingent, cash-backed offer and sell your old home afterward. Different structure, different cost, same goal, so compare both before you decide.
Some homeowners also look at a HELOC on their current home instead of a bridge loan. It can work if you have time and strong income, but it's a different tool with different tradeoffs. We compared the two in detail in Bridge Loan vs. HELOC in Connecticut.
A couple of local details show up in the math here:
Any lender worth working with will answer all five without hedging. For the record, AFC's answers to three and four: no prepayment penalty, and interest accrues to payoff.
You don't need to guess at your numbers. AFC's quote flow takes about two minutes, doesn't ask for your Social Security number, and doesn't put a hard pull on your credit. You'll see what your equity supports before you talk to anyone.
Get your 2-minute quote, or start with our bridge loans in Connecticut page for current terms.
We're a family-owned Connecticut lender, based in Monroe since 1998, with a 4.9-star rating across 461+ Google reviews. We lend in Connecticut, Massachusetts, and Rhode Island.
We lend our own money on bridge loans across New England. Each page covers the local timeline and terms:
It depends on the lender and the program. Most short-term bridge loans carry a fixed rate for the term, but you should confirm this in writing before you sign, along with what happens if the loan runs past its maturity date.
No. AFC's bridge loans have no prepayment penalty, so you pay interest only for the days you actually hold the balance. If you're comparing lenders, ask specifically about prepayment penalties and minimum-interest periods. A bridge loan that penalizes an early payoff defeats much of the point.
Pricing is set by the structure of your specific deal: your equity position, lien position, property type, and exit plan. The most reliable way to improve your quote is to borrow against less of your equity and have a clear payoff plan, not to haggle over the sheet.
Sometimes, depending on how much equity you have and where the loan sits. Ask your Loan Officer to show you both versions, costs paid at closing and costs financed, so you can see what each does to your monthly number and your final payoff.
Those are business-purpose, investment-only loans for non-owner-occupied property, handled through AFC Credit Partners. They're priced around the project (purchase price, rehab budget, after-repair value, and draw schedule), not around the equity in a home you live in. Different product, different math.
Usually, yes. That's the most common situation. What matters is how much equity is left after your existing loan, and our Approval Team reviews that alongside the rest of your file.
Written by Gaetano Ciambriello, Home Finance Advisor at AFC Mortgage Group (NMLS #1783508).
AFC Mortgage Group LLC | NMLS #2801 | Monroe, CT | Equal Housing Lender.
This article is for educational purposes only and is not a commitment to lend. It does not quote or guarantee any rate, term, or approval, and it does not constitute financial, tax, or legal advice. Rates, points, and fees vary by borrower and by transaction. Business-purpose and investment-property loans are offered through AFC Credit Partners and are not available for owner-occupied properties. All loans are subject to credit approval, property approval, and Approval Team review.
Become homeowners. AFC Mortgage Group will help you navigate the loan process, secure financing, and purchase your dream home.
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