You found the house you want—but you haven’t sold the home you currently own.
Many homeowners assume that means they either need to make a contingent offer or take out a traditional bridge loan.
There may be another option.
For qualified homeowners with substantial equity in their current home—or who own it free and clear—we offer a cross-collateralization loan that may allow you to purchase your next home before selling your current one.
How Does Cross-Collateralization Work?
Instead of setting up a separate bridge loan, the financing is secured using both your current property and the new property you’re purchasing.
A lien is placed against both properties as part of the transaction.
With the program we offer:
- Payments are interest-only
- The loan must be paid off within six months
- Closing costs may be lower than other short-term financing options
- In qualifying situations, we may be able to use an AVM (Automated Valuation Model) rather than requiring a full appraisal
This can give you time to purchase your new home, move, and then sell your current home afterward.
How Is This Different From a Bridge Loan?
This is an important distinction. They are not the same loan.
With a traditional bridge-loan structure, a homeowner may have multiple obligations at the same time:
1. Their existing mortgage payment on the home they currently own.
2. A separate bridge-loan payment secured by the equity in that property.
3. The mortgage payment on the new home they’ve purchased.
That can mean carrying several housing-related obligations until the original home sells.
Cross-collateralization is structured differently.
Rather than simply adding another loan behind your existing mortgage to provide funds for the purchase, the properties are used together as collateral for the financing.
With our program, the short-term payment is interest-only, and the loan is designed to be paid off within six months.
Once the existing home is sold, the proceeds can be used to pay off the required financing and release the applicable lien.
The goal is simple: give a qualified homeowner a way to buy the next house without having to sell the current one first—and without automatically relying on a traditional bridge-loan structure.
What About an Appraisal?
Another potential advantage is that a full appraisal may not always be required.
In qualifying situations, we may be able to use an AVM, or Automated Valuation Model, to determine an acceptable value for the existing property.
Whether an AVM can be used depends on the property, available data and the specifics of the transaction.
Could This Make Your Offer Stronger?
Potentially.
If this financing allows you to purchase without making your offer dependent upon the sale of your current home, you may be able to submit an offer without a home-sale contingency.
That’s especially valuable when you’ve found the home you want but aren’t ready—or don’t want to be forced—to sell your existing home first.
Is Cross-Collateralization Right for You?
This isn’t a loan for everyone.
Your existing equity, current mortgage balance, income, debts, credit, property values and overall financial situation all have to make sense.
But if you have significant equity in your home—or own it free and clear—and want to purchase another home before selling, it’s an option worth knowing about.
Before assuming you need a contingent offer or a traditional bridge loan, let’s look at the numbers.