What Is an Exit Strategy?

An exit strategy is the plan you have in place to repay your bridge loan when the time comes to do so.

Bridge loans are designed to be a short-term funding solution and although they are very useful when needed, it’s crucial that you can repay, when the end of your bridge loan term arrives. Arrival Home Loans bridge loans become due in 11 months.  However, most are paid off on average within 6 months.  

Bridge loans are not designed as long-term loans, and lenders aren’t looking to fund on that basis. As such, all parties are keen to ensure that the loan can be repaid in full and on time. An Arrival Home Loans mortgage professional can help ensure you have a successful exit strategy developed prior to obtaining your bridge loan.

Common Types of Exit Strategies:

  • Sale of departure residence (very common)
  • Refinance to a longer-term mortgage (very common)
  • Sale of other investments
  • Sale of a secondary property
  • Inheritance
  • Sale of primary property

Three Types of Bridge Loans:

  1. Equity Bridge: crossing your existing home to secure a purchase loan up to 100% of the purchase price. This is the most versatile and powerful Arrival Home Loans product we offer.
  2. Bridge to Conventional: for renters and first-time buyers. This is an easy, fast-closing purchase loan.  There are no seasoning or reserve requirements.  Gift funds are also eligible for down payment.  Maximum loan to value of the home up to 75%.
  3. Down Payment Bridge: If you already have a conventional loan lined up for your new purchase but need funds for a down payment.  Borrow the equity in your current home for the down payment on your next home.  This can be faster and easier than a home equity line of credit (HELOC).

For current homeowners, here is a comparison of our Cross-Collateral Bridge Loan and our Down Payment Bridge Loan:

 Cross-Collateral BridgeDown Payment Bridge
Allows you to move into your new home before selling the oldxx
Allows you to tap the equity in your existing homexx
Allows you to remove sales contingency from your offer on the new housexx
Allows you to vacate and remodel your old home and sell it for a higher pricexx
Requires separate purchase financing for your new home x
Provides all the purchase financing for your new homex 
Allows you to make offers that compete with cash offers along with quick closing and no financing contingencyx 
Provides up to 100% financing to purchase the new homex 
Can rescue deals when bank financing is delayed or falling throughx 
Generally, requires no appraisal or income and asset verificationx 
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