Bridge loans are used by seniors to cover their care costs while they wait for access to other funds, such as a pension or the proceeds of a property sale. There are roughly 800,000 seniors living in assisted living facilities in the United States, and it’s estimated that 7 out of 10 Americans will require assisted living care at some point in their lives. Bridge loans can be helpful for seniors who are unable to cover the cost of care out of their current income or savings.
The average cost of assisted living in the United States is $4,500 per month. While seniors who are eligible for Medicaid can receive some support with the cost of their care through the program, not all seniors will qualify.
As an alternative, a bridge loan is a loan that’s secured against the value of the senior’s property. These loans are designed to be easy to access with a fast approval process. Seniors can borrow against their property for up to one year, giving them access to the care they need as soon as they need it.
Most lenders expect a bridge loan to be repaid within a year, although it is sometimes possible to negotiate a longer term. A senior might take out a bridge loan if they find themselves needing assisted living or some other type of care a year before they’re able to claim their VA pension, for example.
In other cases, a senior may need to sell their home in order to cover their long-term care costs. Bridge loans give seniors the time they need to put their house on the market and complete the sale. If a person expects they’ll need to draw on a line of credit for longer than a year, there are other finance options such as reverse mortgages that may be more suitable.