Published – 11/27/2022

A bridge loan is a form of short-term loan taken out against the value of a house that seniors can access to cover the cost of assisted living or other forms of care. It’s estimated that 70% of Americans will require assisted living care at some point in their lives. While seniors on low incomes may be eligible for financial support via Medicaid, others may be expected to cover their costs out-of-pocket, which can be challenging for those with limited income and savings.

Bridge Loans Help Seniors Access Care When They Need It

One of the key benefits of a bridge loan is that lenders tend to process applications quickly. A bridge loan unlocks the equity in a person’s property, giving the lender a claim against the property until the loan is repaid. This type of borrowing often carries above-average interest rates, making it a last-resort option. However, it can be a lifeline for older adults who need long-term care services and cannot afford to cover the costs through more traditional means.

Lenders Expect Bridge Loans to be Repaid Within a Year

Bridge loans are intended to serve as a stopgap while a person waits for their insurance to come through or to be able to access their pension. Some families use a bridge loan as a way of accessing assisted living or other forms of care while they are in the process of selling a property and later repay the loan with the proceeds from the sale of the house.

There are other forms of finance, such as reverse mortgages and home equity lines of credit, that may be more suitable for someone who expects to need access to credit for several years. Seniors who are unsure which financial options would be best suited to their circumstances can consult their local Area Agency on Aging for information about nearby organizations offering free and impartial financial advice.

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