The cost of bridging loans can be substantial. Many lenders charge higher interest rates for bridging loans and also levy additional fees, so it pays to compare bridging loan providers carefully. On top of this, you will be paying interest on two home loans – your current mortgage plus the full purchase price of the home you’re buying. Not everyone can service this level of debt, and consequently many people don’t even have the option of obtaining a bridging loan.
The main issue, however, is that if you cannot sell your old home for the price or in the timeframe you anticipated, things can get uncomfortable pretty quickly. Interest on both home loans keeps building up, and if you don’t sell within several months, the bank may even take possession of one or both of the homes.