Want to buy your next Lakeview home without moving twice or risking a contingent offer? You are not alone. Many Chicago move-up buyers want the freedom to secure the right place, then sell on their timeline. In this guide, you will learn how bridge loans work in Lakeview, what they cost, the risks to watch, and smart alternatives like HELOCs or rent-backs. Let’s dive in.
What a bridge loan is
A bridge loan is a short-term loan that gives you access to your equity before your current home sells. You use it for a down payment and closing costs on your next home, then repay the bridge loan when your current home closes.
Bridge financing is common for buyers who want a stronger, non-contingent offer, a faster close, or a single move into their next home.
How it works
- Most bridge loans are interest-only with terms around 3 to 12 months. Some lenders offer extensions up to 12 to 24 months.
- The loan is secured by your current home and sometimes by the new home as well.
- You pay monthly interest while the bridge is outstanding and repay the principal when your current home sells or when you refinance.
- There are two main types: closed-end (sale expected soon) and open-end or longer-term options that offer more flexibility at a higher cost.
Who offers them in Chicago
Bridge loans are offered by banks, credit unions, mortgage lenders, and specialty lenders. Local Chicago lenders and credit unions can be efficient with Lakeview and Cook County closings, since they understand local title and recording procedures.
How bridge loans fit Lakeview
Lakeview is a high-demand Chicago neighborhood with a mix of condos, two-flats, and single-family homes. Desirable properties can attract multiple offers and quick closings. A bridge loan lets you present a non-contingent offer and align your timing with local title, transfer, and attorney-closing steps common in Cook County and the City of Chicago.
Typical timeline
- Prequalification: 1 to 3 days to review equity, payoff, and sale plan.
- Application and underwriting: 7 to 21 days depending on complexity.
- Appraisal or valuation: 1 to 2 weeks if required.
- Funding: coordinated with your purchase closing or earlier, based on lender.
- Term length: often 6 to 12 months, with many borrowers selling within 3 to 6 months.
- Payoff: at your sale closing or via refinance into a permanent mortgage.
What lenders review
- Ownership, equity, and a valuation of your current home.
- Current mortgage payoffs and lien status in Cook County.
- Your listing plan, pricing strategy, and days-on-market expectations.
- Credit, debt-to-income, and cash reserves to cover payments if sale timing slips.
Costs to expect
Bridge loans cost more than standard mortgages, but you gain speed and flexibility. Plan for interest, upfront fees, third-party closing costs, and carry costs on both homes while you own them.
Common fees and rates
- Interest rate: often in the high 5 percent to 12 percent range, depending on lender, credit, and market conditions.
- Origination: commonly 1 to 3 percent of the loan amount, or a flat fee.
- Appraisal, title, recording, and legal fees: similar to other mortgage closings.
- Prepayment: many lenders allow penalty-free payoff at sale, but confirm terms.
- Carry costs: interest on the bridge plus insurance, taxes, utilities, and mortgage payments on both homes until your sale closes.
Sample calculation (illustrative)
- Current home value: $600,000
- Existing mortgage balance: $250,000
- Equity: $350,000
- Lender advance rate: 70 percent of value ($420,000) minus existing mortgage ($250,000) = potential bridge availability of $170,000
- Use $150,000 toward down payment on a $900,000 home
- Bridge rate: 8 percent interest-only, 6-month term
- Monthly interest: about $1,000
- Origination fee: 1.5 percent of $150,000 = $2,250
- If you sell in 4 months: interest around $4,000 plus the fee $2,250, for a total near $6,250, plus standard closing costs
Actual advance amounts, rates, and fees vary by lender and your credit profile. Always request a written term sheet.
Risks and how to reduce them
Bridge loans are powerful tools, but they add short-term cost and timing risk.
- Sale delays increase interest and may trigger extension fees.
- You will carry two homes for a period, which raises monthly costs.
- Market shifts can affect pricing and payoff strategy.
- Additional liens add complexity to refinancing and payoffs.
Lender safeguards you should expect
- Conservative advance limits, often tied to combined loan-to-value caps.
- A listing agreement or written sale plan.
- Proof of cash reserves.
- Appraisal and clear title before funding.
- Short terms with optional extensions for a fee.
Your risk-control checklist
- Price your Lakeview home to the market and align on a realistic days-on-market plan with your listing agent.
- Hold 3 to 6 months of reserves to cover combined carrying costs.
- Negotiate the ability to prepay without penalty and clarify extension fees in writing.
- Set a contingency plan, such as a HELOC fallback or strategic price adjustments if activity is soft.
- Confirm how payoff will be handled between title companies and your real estate attorney.
Bridge loans vs. other options
You have choices. Compare cost, speed, and strength of offer.
HELOC or home equity loan
- Pros: often lower rates than bridge loans, flexible access to funds, and the option to keep the line open longer.
- Cons: variable rates can rise, borrowing limits may be tighter, and underwriting can be strict.
- Best fit: you have strong equity, want flexibility, and do not need the absolute strongest offer stance.
Contingent offer
- Pros: you avoid carrying two homes and extra loan costs.
- Cons: in competitive Chicago neighborhoods, sellers may pass on contingencies or require longer timelines.
- Best fit: a balanced market or a seller open to timing coordination.
Extended close or rent-back
- Pros: aligns closing dates and may give you possession flexibility.
- Cons: requires cooperation and can involve added fees or lease-back terms.
- Best fit: both sides are flexible and willing to negotiate possession.
Sale-leaseback
- Pros: unlocks equity first while letting you stay in place briefly.
- Cons: you will pay market rent and must act quickly on the next purchase.
- Best fit: you want sale proceeds in hand and short-term occupancy.
Quick decision guide
- Choose a bridge loan when you need a non-contingent offer in Lakeview, have solid equity, expect a timely sale, and accept higher short-term costs for certainty.
- Choose a HELOC or home equity loan when you prefer lower rates and can accept a slightly weaker offer position.
- Choose contingencies or timing strategies when the seller is flexible and competition is lighter.
Steps to get started in Lakeview
A clear plan and tight coordination reduce stress and cost.
- Meet lenders early
- Get prequalified with a bridge lender and your permanent mortgage lender. Request written terms, including any prepayment rules and extension fees.
- Estimate your equity
- Ask your agent for a comparative market analysis on your Lakeview home. Align on pricing and a realistic days-on-market target.
- Define the funding gap
- Determine your target down payment, expected bridge amount, and monthly carry budget across both homes.
- Prepare documentation
- Mortgage statements and payoff figures.
- Recent tax returns, pay stubs, and bank statements.
- Listing agreement or written sale plan.
- Appraisal or broker price opinion if required, plus title search.
- Coordinate closing logistics
- Work with your title company and real estate attorney to schedule payoffs and recordings in Cook County.
- Plan for city and county transfer taxes, title fees, and recording steps.
- Confirm the exact payoff process and timeline for the day your current home closes.
- Review tax questions
- Interest on a bridge loan may be deductible if it meets IRS rules for acquisition indebtedness and is secured by a qualified residence. Tax rules are complex, so consult a tax advisor.
Work with a trusted Lakeview team
If you want to upgrade in Lakeview with one seamless move, you need a disciplined plan, precise pricing, and proactive lender coordination. With 77-plus years of combined experience and over $1.2B in career sales, our team brings the neighborhood knowledge, negotiation skill, and white-glove process you expect. As part of Jameson Sotheby’s International Realty, we pair concierge service with broad market reach to help you secure the right home and sell with confidence.
Ready to map your move-up strategy? Contact IKGroup to request a private consultation and home valuation.
FAQs
What is a bridge loan when buying before selling in Lakeview?
- A short-term, interest-only loan secured by your current home that provides funds for the next purchase, then gets repaid when your current home sells.
How long does bridge loan approval take in Chicago?
- Prequalification can take 1 to 3 days, with full underwriting typically 7 to 21 days plus 1 to 2 weeks for any required appraisal.
How much can I borrow on a bridge loan?
- Lenders often advance a portion of your equity, with combined loan-to-value caps commonly around 80 percent, though exact limits vary by lender.
What does a bridge loan cost compared with a mortgage?
- Expect higher rates than conventional mortgages, plus 1 to 3 percent in origination fees, third-party closing costs, and monthly interest while you carry both homes.
What if my home does not sell before the bridge term ends?
- You may request an extension for a fee, refinance, adjust pricing to accelerate the sale, or use a backup plan like a HELOC if available.
Can bridge loan interest be tax-deductible?
- It may be deductible if it meets IRS rules for acquisition indebtedness and is secured by a qualified residence. Always confirm with a tax advisor.
