Making the transition to a memory care community can be an emotional and uncertain time, including when it comes to finances. At Terra Vista, we often have families who wonder how they’ll pay for memory care support while they wait for funding to come through – for a house to sell, an insurance policy to pay out, and more. That’s where a bridge loan may come into play.
Our expert team is here to explain what bridge loans are, how they work, where to get them, and their pros and cons before you choose this option to fund memory care support for your loved one.
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What Are Bridge Loans?
For starters, what are bridge loans? This type of funding is a short-term loan that helps to “bridge the gap” between a financial need (like transitioning into a memory care community) and the arrival of expected funds (like proceeds from selling a home or an insurance policy payout). To put it simply, bridge loans give you access to immediate cash, so you don’t have to wait for necessary care.
Bridge loans are most commonly used when a family wants to move a senior loved one into memory care, but the funds needed to pay for the community are tied up in a house, investments, or an insurance policy that’s not yet paid out.
How Do Bridge Loans Work?
Here’s what you should know about how bridge loans work:
- They’re short term. They’re usually accessible for six to 12 months and then they have to be paid back.
- They can be secured or unsecured. Some bridge loans allow you to use home equity as collateral. Others are unsecured (they don’t require equity) but may have higher interest rates.
- They’re fast to fund. Many lenders can approve and release bridge loan funds within a few business days.
- They’re structured with interest-only payments. Most bridge loans require interest-only payments each month, with the full balance due when your home sells or the term of the loan ends.
Essentially, if your senior loved one needed to move into a memory care community, but their house hadn’t sold yet, you could apply for a bridge loan. This would give you quick access to money to cover the care costs, and you could repay the loan as soon as the home is sold.
Who Offers Bridge Loans?
Where can you find a bridge loan to help fund senior care in the short term? Here are some options to explore:
- Traditional banks and credit unions
- Specialty senior care finance companies like Elderlife Financial or Second Act Financial
- Real estate lenders who work with senior living transitions
If you’re not sure where to start, it’s wise to ask local banks and credit unions or consult a financial planner who’s well-versed in senior finances.
Why Would You Need a Bridge Loan for Memory Care Support?
To help you more confidently decide if this type of short-term funding is right for your family, here are the most common scenarios in which bridge loans are useful.
You have an urgent need for care for your loved one. If your senior loved one is experiencing rapid cognitive decline or is no longer safe living at home, there’s no time to delay. A bridge loan can help bridge the gap, so you can access memory care immediately.
Your funds are temporarily inaccessible. You could be waiting on a pension plan, a real estate closing, a life settlement, or an insurance policy payout. Whatever the circumstances, a bridge loan can pay for memory care until your more permanent funding sources come through.
You want to avoid stress and delays. A bridge loan can also take the pressure off of you to move quickly. If you want time to stage, list, and do market research before selling a home, a bridge loan can give you that time.
What Are the Pros and Cons of Bridge Loans?
Like any funding source, these loans come with advantages and trade-offs. Here’s a quick breakdown of the pros and cons of bridge loans.
Pros:
- You get fast access to cash.
- There’s no need to delay your loved one’s care.
- There’s typically no upfront payment required.
- Bridge loans can reduce the pressure of selling a home quickly.
Cons:
- These loans have higher interest rates than traditional loans.
- They have a short repayment period.
- A bridge loan may require good credit or home equity.
- Interest-only payments still require monthly budgeting for families.
Let Terra Vista Walk You Through Funding Memory Care
A bridge loan may not be the right funding option for everyone, but they can serve as a much-needed lifeline for families who have urgent care needs for their loved ones. These loans offer flexibility, reduce financial stress, and allow your loved one to access immediate care.
At Terra Vista, we know that every family’s financial situation is unique, and we’re here to help you navigate funding memory care for your loved one. Sit down with our expert advisors to walk through options, learn more about our community and our care plans, and find the confidence you need to transition your senior loved one into the right program for their needs.
Ready to learn more? Download our guide to financing and affordability. You can also contact us to schedule a time to connect with one of our advisors or set up a personalized tour of our beautiful community. We’re here to support you every step of the way!
