BRIDGE LOANS:

A Bridge Loan is a short-term Loan typically used to “Bridge” a financial gap until a more permanent financing solution is secured. Bridge Loans are versatile financial instruments and serve various purposes depending on the specific needs of the Borrower. A Bridge Loan can serve the purpose of a Purchase Loan, or a “Rate and Term” style Refinance Loan, or even a Cash-Out Refinance Loan. And, when a Cash-Out Refinance is utilized, there are typically no restrictions on the Cash that is retrieved at Closing. This “Cash in Hand” option is what makes a Bridge Loan attractive to many Investors because oftentimes the Cash can be used to capitalize another Investment which will produce yet an even greater return.

BENIFITS OF A BRIDGE LOAN:

A Bridge Loan often offers a quick approval and funding which is crucial for a Borrower needing immediate access to funds for a time-sensitive opportunity. Typically Bridge Loans are Interest-Only Loans providing you with better Cash Flow management. Also, Bridge Loans typically lack Prepayment Penalties, offering borrowers the freedom to repay the Loan earlier than the agreed-upon Term without incurring any additional costs.

In certain scenarios, multiple collateral options may be available, allowing borrowers to use various Properties to secure the Loan. “Cross-Collateralization”, as it is termed, is a creative function that enables the use of the Equity in one Property to be used to secure a Loan for another Property providing an utmost strategic advantage to an Investor and also showcasing extreme flexibility for those Investors with a diverse Real Estate Portfolio.

The Loan Payments can often be “rolled” into the Loan hereby alleviating the worry of any immediate financial burden to an Investor. Experienced borrowers will also benefit from more favorable Terms including a lower Interest Rate and possibly extended Loan Terms. These features collectively enhance the versatility of Bridge Loans, making them a super valuable tool for navigating complex financial situations and seizing lucrative investment opportunities.

THE “LOW-DOWN”…

Due to the higher risk and shorter timelines, Bridge Loan Interest Rates are typically higher than other solutions that carry longer Terms. Bridge Loan Terms range from between 6 months to 3 years. The maximum LTV of a Bridge Loan is typically 80% for a Purchase or a Rate and Term Refinance Loan, and 75% for a Cash Out Refinance Loan. Borrowers should carefully consider the costs and risks associated with Bridge financing and have a clear exit strategy for repaying the Loan. Always remember that the goal is to use a Bridge Loan as a temporary solution while either working towards securing a more stable financing solution with a longer Term, or waiting for the Property to sell.

(***OTHER OPTIONS AVAILABLE***)