Bridge Loans

A bridge loan is a short-term financing option used primarily in real estate transactions in the United States. It "bridges" the gap between the buyer's new mortgage and the sales price of a new home when the buyer's existing home hasn't yet sold. These loans are also known as interim financing, gap financing, or swing loans. Typically secured by the buyer's existing home, a bridge loan provides the necessary cash to help finalize the purchase of a new home before selling the old one.

▾ What is a bridge loan?

A bridge loan is a short-term financing option that helps you “bridge” the gap between buying a new property and selling your existing one. It provides quick access to funds until long-term financing or proceeds from a sale become available.

▾ How long does a bridge loan last?

Typically, bridge loans have a term of 6 to 12 months, though some lenders may offer extensions depending on your situation and repayment plan.

▾ Who can benefit from a bridge loan?

Homeowners or buyers who need immediate financing to purchase a new property before selling their current one often use bridge loans. They’re also helpful for investors needing fast capital for time-sensitive deals.

Why Bridge loans ?

✔ Loan on a single fix and flip project

✔ Credit line for use on multiple future projects

✔ Loan on single rental property not based on DSCR

Benefits of Bridge Loans

Flexibility in Home Buying: One of the primary benefits of a bridge loan is the ability to purchase a new property without waiting for your old home to sell. This can be quite important in highly competitive real estate markets, where waiting to sell could result in losing out on the ideal property.

Immediate Cash Flow: Bridge loans offer a quick influx of funds for those needing immediate home purchase cash. This is especially helpful when purchasers must take immediate action.

No Immediate Payments: Some bridge loans offer the benefit of deferring payments for a few months. This can significantly relieve homeowners who might otherwise struggle with two mortgages simultaneously.

Better Offers: In a seller's market, buyers who can make offers without sale contingencies (dependent on the sale of their current home) are often viewed more favorably. A bridge loan can facilitate this by providing the funds to make such offers.

Consolidation of Costs: By combining the purchase and sale costs into one loan, bridge loans can also reduce the total fees and interest costs compared to obtaining separate financing for each transaction.

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