Bridge Loan vs. Mortgage Recast: How to Buy a New Home Before Selling Your Current One
Are you planning to buy a new home but haven’t sold your current one yet? In today’s competitive real estate market, making an offer without a home-sale contingency can significantly increase your chances of getting accepted. Two common strategies that homeowners use to make this happen are bridge loans and mortgage recasting.
Here’s a simple breakdown to help you understand how each option works—and which one might be the best fit for your financial goals.
What Is a Bridge Loan?
A bridge loan is a short-term loan that allows you to use the equity in your current home to help finance the down payment on a new home before your current property sells. This type of loan is usually repaid once your original home closes.
Benefits of a Bridge Loan:
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Lets you buy before you sell
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Helps you make a non-contingent offer—a major advantage in competitive housing markets
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Offers flexibility during the transition between homes
Drawbacks:
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Higher interest rates than traditional home loans
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You must be able to carry two mortgage payments temporarily
What Is Mortgage Recasting?
Mortgage recasting is a cost-effective option where you apply a large lump-sum payment to your new mortgage—usually after you’ve sold your existing home. The lender then recalculates your monthly payments based on the new, lower balance. Best of all, you keep your original loan and interest rate.
Benefits of Recasting a Mortgage:
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Lower monthly payment without refinancing
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Keeps your current low interest rate
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Minimal cost (usually a small one-time lender fee)
Drawbacks:
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You must purchase your new home before your old one sells
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Requires sufficient savings for the initial down payment
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Not all lenders offer recasting
Bridge Loan vs. Mortgage Recast: Key Differences
| Feature | Bridge Loan | Mortgage Recast |
|---|---|---|
| Helps avoid home-sale contingency | Yes | Yes |
| Used for down payment | Yes | No (requires upfront funds) |
| Requires sale of current home | Yes (to repay loan) | Yes (to apply lump sum) |
| Cost | Higher interest, short-term loan | Lower one-time lender fee |
| Credit/Income Requirements | Must qualify for two mortgages | Must qualify without sale proceeds |
| Keeps current loan and interest rate | No | Yes |
Which Option Is Right for You?
If you need access to your equity to buy your next home, a bridge loan can provide the funds you need up front. If you already have enough cash for the down payment and just want to reduce your future mortgage payments, a mortgage recast might be the smarter, lower-cost move after you sell.
Both strategies eliminate the need for a sale contingency—giving you a stronger offer and a better chance to land the home you love.
Want to Explore Your Financing Options?
If you’re a homeowner planning to buy before you sell, let’s run the numbers together. We’ll help you compare bridge loans and recasting options so you can choose the best strategy for your goals.