![]() |
Bridging Finance BasicsBridging finance is a short-term loan that is used as a way to provide funding for the purchase of a new property while the borrower awaits the sale of an existing property. Unless all the stars are in perfect alignment, it's tricky to coordinate the sale of one property and the purchase of another property so that the transactions occur simultaneously. Bridging finance or a "bridge loan" as it is more commonly referred to, makes such transactions possible. They keep the borrower from ending up in a dire financial situation as can happen when forced to pay two mortgages at the same time. Bridge loans can be used either for business or for personal reasons. Primarily short term in nature, the process for obtaining a bridge loan is similar to that of most types of loans. Most importantly, it's advisable to work with a lender that has experience with this type of loan. Also, since the need for a bridge loan often arises with little advance notice, being pre-approved for such a loan is a good idea. Bridge loans typically are structured as interest only loans meaning that the borrower pays only the interest on the loan each month. The borrower continues with this repayment plan until the property the loan is being used for is sold. When the sale finally does occur, the proceeds of that sale are used to repay the principal. The principal payment typically is in the form of a one-time, lump-sum payment. The lender does not need to worry too much about default because the borrower is required to put up collateral to secure the loan. This can be in the form of another piece of property, business machinery or inventory on hand. But rest assured the lender will still thoroughly review the credit history of the applicant, the business and any partners or others with an ownership interest to assess the level of risk it is undertaking. The interest rate assigned to the bridge loan is based on several factors: the anticipated risk associated with the bridge loan, the prevailing interest rates and a premium added by the lender. Since bridge loans are short-term, generally not longer than two years, the lender has only a short time to make money on the deal. The profit is derived from the interest rate. Expect to pay a higher rate of interest for a bridge loan. And remember, the monthly payments on a bridge loan generally will be for interest only. Expect to pay off the bridge loan in full, usually as a one time balloon payment, as soon as the property is sold. In the event that the property is not sold before the bridge loan matures, it can usually be converted to a conventional loan without paying a penalty. But it's always a good idea to double check this before assuming. Need to source the best Bridging Finance available quickly, try independent commercial brokers Commercial Lifeline, specialists in Commercial Bridging Finance and Commercial Mortgages. Download our free Commercial Mortgage guides by visiting our Commercial Mortgage Guide page. This article comes with reprint rights. Feel free to reprint and distribute as you like. All that we ask is that you do not make any changes, that this resource text is include, and that the link above is intact.
Mortgage Refinance Rates Fall for Most Loan Types Investopedia Mortgage and refinance rates today, July 26, 2024: Rates are well below their 52-week averages Yahoo Finance Mortgage and refinance rates today, July 24, 2024: Rates have staggered since last week Yahoo Finance Mortgage and refinance rates today, July 27, 2024: Fixed rates decrease, adjustable rates increase Yahoo Finance Average Mortgage Interest Rates: Mortgage Rates by Credit Score, Year, and Loan Type Business Insider Mortgage Recasting: What It Is And How It Works Bankrate.com How to Refinance Your Mortgage NerdWallet Current Mortgage Trends: Are Mortgage Rates Going Down? Business Insider Jumbo Loan: Definition, Rates, and How to Qualify Business Insider 15-Year Mortgage Refinance Rates: Compare Current Rates Business Insider Best Mortgage Refinance Lenders of July 2024 Business Insider Mortgage Interest Rates Today, July 26, 2024 | Rates Steady After Falling Earlier This Month Business Insider How Much Does It Cost to Refinance? Average Closing Costs by State Business Insider How To Refinance An Underwater Mortgage Bankrate.com Mortgage Interest Rates Today, July 24, 2024 | Rates Hold Steady Business Insider FHA Refinance Rates: See if You Could Lower Your Rate Business Insider Best Refinance Lenders of July 2024: Refinance Your Mortgage The Motley Fool Today's Mortgage Rates by State - July 24, 2024 Investopedia Understanding 30-Year Mortgage Rates: A Comprehensive Guide Business Insider Current VA Refinance Rates: See if Refinancing Is Worth It Right Now Business Insider Mortgage refinance demand drops further, despite homeowners sitting on $17 trillion in equity - CNBC What current mortgage refinance rates mean for your situation CNN Underscored Refinance Rates Today: Compare Mortgage Refinance Offers Business Insider Mortgage Points: What Are They And How Do They Work? Bankrate.com Current Home Equity Loan Rates: Your Guide to the Best Rates Business Insider Is it Time to Refinance Your Mortgage? That Depends on When You Closed The Wall Street Journal Refinance applications increase despite overall drop in mortgage activity Mortgage Professional Assumable Mortgages 2024: How They Work, Benefits, and Insights Business Insider Real Estate Housing Market 2024: Will Home Prices Drop? Business Insider Mortgage Interest Rates Today, July 21, 2024 | Rates Are Down This Month. Will They Continue to Drop? Business Insider Mortgage refinance demand jumps to two-year high Morning Brew Should You Refinance Your Mortgage In 2024? Bankrate.com MBA: Mortgage Applications Decreased in Weekly Survey Calculated Risk Mortgage Rate History: 1970s To 2024 Bankrate.com How To Get The Best Refinance Rate Bankrate.com 30-Year Mortgage Refinance Rates Business Insider Do I Need Money Down To Refinance My Mortgage? Bankrate.com The Ascent's Complete Guide to Mortgages The Motley Fool Types of Mortgage Refinance Options Bankrate.com Housing Market Predictions 2024: What Homebuyers Should Know Business Insider Cash-Out Refinancing: What It Is, How It Works Bankrate.com Cash-Out Refinance For Home Improvements Bankrate.com Should You Refinance Halfway Through Your Mortgage? Bankrate.com Discover Home Loans Review: Learn About Discover Home Equity Loans and Mortgage Refinancing Business Insider What Credit Score Do You Need To Refinance? Bankrate.com Are Cash-Out Refinance Rates Higher? Bankrate.com Loan Modification Vs. Refinance Bankrate.com Mortgage Interest Rates Today, July 22, 2024 | Rates Are Dropping. How Low Could They Go? Business Insider Best Student Loan Refinance Companies of 2024 Business Insider Refinance Requirements: What You Need to Refinance Your Home in 2024 The Mortgage Reports
|