![]() |
Bridging Loan BasicsA Bridging Loan is a short-term loan 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 in such a way that the transactions occur simultaneously. A Bridging Loan or "Bridging Finance" as it is also commonly known, makes such transactions possible. They keep the borrower from getting stuck in a rough financial corner, which typically means being forced to pay two mortgages at the same time. Bridging Loans can be used either for commercial or personal reasons. Short term in nature, the application process for a Bridging Loan is similar to that of a standard loan. Most importantly, it's advisable to work with a lender that is experienced with this type of loan. Plus, as the need for a Bridging Loan often arises with little advance notice, being pre-approved for such a loan is a smart move. Bridging Loans are usually interest only 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 need not be too concerned about default because the borrower is required to put up collateral to secure the loan. This is typically in the form of another piece of property. 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. Poor credit however need not be an obstacle. The interest rate on a Bridging Loan is based on several key factors: the potential risk associated with the loan, the current interest rates and a premium added by the lender. As Bridging Loans are short-term, generally not longer than two years, and in most cases only a metter of months, the lender has only a short time to make a profit on the deal. The profit is derived from the interest rate. Expect to pay a higher rate of interest for a Bridging Loan. And remember, the monthly payments are generally interest only. You should also expect to pay off the Bridging Loan in full, usually as a one time payment, as soon as the property is sold. In the off chance that the property is not sold before the Bridging Loan matures, it can usually be converted to a conventional loan without a payment penalty. But as ever you should not assume this is the case and be sure to check with your lender that this is an option if circumstances call for it. About the Author 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.
Today's Mortgage, Refinance Rates: June 6, 2023 | 30-year Rates Increase 1.7% Since Last June Business Insider With high interest rates, does it make sense to buy that house now? ABC 10 News San Diego KGTV It May Cost More to Refinance a Mortgage Than You Think Yahoo Finance The Great Pandemic Mortgage Refinance Boom - Liberty Street Economics Liberty Street Economics - UK mortgage borrowers face painful refinancing, warns think-tank Financial Times This Is the No. 1 Thing to Remember About Higher Mortgage Rates The Motley Fool Compare Today’s Refinance Rates | U.S. U.S News & World Report Money How to get a low-cost mortgage refinance Yahoo Finance What is mortgage refinancing and how does it work? Yahoo Finance Total Household Debt Reaches $17.05 trillion in Q1 2023; Mortgage ... Federal Reserve Bank of New York What Is A Home Equity Loan? Zing! Blog by Quicken Loans Fixed rate cliff spurs record mortgage refinancing MacroBusiness Will Mortgage Rates Go Up After the June Fed Meeting? The Mortgage Reports Refinancing your mortgage could save you thousands — here are some of the best refinance lenders CNBC How does mortgage refinancing work? CBS News Should I Refinance My Mortgage? - Buy Side from WSJ The Wall Street Journal Here’s how sharply mortgage refinancing has dropped off Yahoo Finance Today's Mortgage, Refinance Rates: May 29, 2023 | Rates Still High Business Insider Today’s 30-year mortgage refinance rates hit lowest levels in 15 days | Oct. 28, 2022 - Fox Business CFPB Launches Effort to Spur New Opportunities for Homeowners ... Consumer Financial Protection Bureau Analysis | It Will Pay to Wait to Refinance Your UK Mortgage The Washington Post Why Older People Can’t Get New Mortgages The New York Times Small Business Loan Refinance Bankrate.com Should you refinance your mortgage to pay off debt? New York Post VA refinance rates - current VA loan refinance rates today Business Insider Current 15-year refinance rates today Business Insider Refinance Closing: An Overview Zing! Blog by Quicken Loans What Credit Score Is Needed To Refinance a House | Chase Chase News & Stories Compare Current 30-year Refinance Rates Business Insider 7 Refinancing Programs for Seniors Total Mortgage
|