Bridge Financing for Memory Care & Assisted Living
As you know, life can change in a moment. If you’re caring for an aging parent, you know tomorrow can look different than today. If the unexpected happens and you need to move your loved one into a Memory Care or Assisted Living community sooner than you were planning on, what are your financial options? Many families find bridge financing to be a good short-term solution to help pay for the care their loved one needs while they sort through their parent’s assets.
What Is a Bridge Loan?
According to the Department of Health and Human Services, someone turning 65 today has almost a 70% chance of needing some higher level of care in the future. If your loved one hasn’t factored care into their retirement savings, you could be left scrambling to put a financial plan in place.
Bridge financing is a short-term loan that is designed to “bridge the gap” during a transitional period with quick funding while more long-term financing is found. With a typical term of six months to a year, bridge loans are designed to be approved in 24 hours or less to provide virtually instantaneous financial support to those who need cash for time-sensitive expenses like Assisted Living or Memory Care. A bridge loan can make the wait for your loved one’s existing home to sell, long-term care insurance payouts to be made or the approval of veterans pension benefits less stressful on everyone.
While this option may sound like a traditional home equity line of credit, (or HELOC loan), lending institutions will specify how bridge loan funds can be used. They are also typically a bit more expensive than a traditional HELOC loan.
Financial institutions will typically offer one of two payment structures for their bridge loans: either a lump sum payment or a line of credit ranging from $20,000 to $30,000. If you structure your bridge loan as a line of credit, you can draw on funds as needed and only pay interest on the amount used.
Why Use Bridge Financing for Assisted Living or Memory Care?
When you consider the monthly fees, community fees and relocation expenses, the cost of moving into Assisted Living or Memory Care can be significant. A short-term bridge loan gives you the flexibility to meet these costs. Because you’ll have recurring fees rather than one large fee, it’s better to set up a line of credit rather than get a lump sum of cash.
Before considering bridge financing, do some research on the current housing market for a rough estimate of how long homes are taking to sell in your area. If you need to think about other options before committing to a bridge loan, consider a home equity line of credit (HELOC), borrowing against your 401(k) plan or getting a loan secured by stocks, bonds or other investments. As with any financial decision, be sure to consult with your financial advisor.
Bridging to a Better Future
If you’re considering an Assisted Living or Memory Care community for a loved one, you can remove financial anxiety by having a plan in place to pay for your expenses. You can learn more about Artis Senior Living and our Memory Care philosophy here or more information about our Assisted Living community: Artis Senior Living of Lakeview. Or, if you’d like to discuss the financial options of your family member’s care, contact us here.
