Bridge loans fill the gap when you are buying a new home while still carrying a mortgage on the house you are selling. They are temporary loans, paid off when you sell your former home. Generally, the mortgage lender for your new house arranges the bridge loan, although you can obtain a bridge loan from other lending sources.
Bridge loans have higher rates than the new mortgage loan. While somewhat expensive, the benefits of bridge loans lie in their short-term nature and relative convenience during the buying and selling process. Although loan lengths vary, usually bridge loans are issued for no more than six months.