Bridge Loans
Bridge Loans
Hard Money Bridge Loans
Short-term funding is often done with a bridge loan. Term lengths for bridge financing usually range from 6 to 24 months. Due to the greater risk, bridge loan rates are higher than those for loans from traditional institutions. We do examine your creditworthiness, but since the property itself will serve as the security for the loan, your approval won’t be determined solely by that factor. For borrowers who might presently have less-than-ideal credit but have equity in the property, this is advantageous.
To safeguard the lender from a borrower default, these loans have smaller loan to value (LTV) ratios than conventional mortgages obtained from banks. Typically, the bridge loan lender will only permit a debt to value ratio between 50% and 70%. The loan amounts accessible for bridge loans can vary from a relatively modest $100,000 to a jumbo bridge loan in the millions of dollars. To repay the debt, the borrower may sell the asset or make other long-term financing arrangements.
Bridge Loans For Residential And Commercial Properties
Gap loans, both residential and business, are becoming more popular as a means of obtaining quick cash to take advantage of transient real estate opportunities. As well as requiring more information and documentation, commercial transactions typically have a smaller LTV than residential ones. Closings can take one to four weeks, and documentation is not as comprehensive as with a conventional mortgage. This kind of credit may also be referred to as a swing loan, bridging loan, gap financing, or interim financing.
| Loan Application Approval Timeline | Same day approval available |
| Time to Fund Loan | 2 to 4 Weeks Typically |
| Property Types | Single-family, multi-family, commercial, industrial |
| Loan Amounts | $100,000 to $50,000,000 |
| Loan Terms | 6 months to 24 months |
| Lien Position | 1st |
| Loan to Value (LTV) | Up to 75% of the current value of property |
| Interest Rates | From 7% to 14% (Interest-only payments) |
What's the Procedure?
When an investor already possesses a property and wants to buy a new one, that would be an illustration of a conventional bridge loan. Even though the investor lacks the necessary funds, he or she must secure the new property before selling the current one. In order to obtain money for the purchase of the new property, the investor can use gap financing to borrow against the property they already own.
The investor can sell their initial property and settle the bridge loan after buying the new one. The “gap” between the selling of the current property and the purchase of the new property is “bridged” by the bridge loan.
Most of the time, we can transform the gap loan into a conventional commercial mortgage with better conditions. Hard money loans are available nationally from seasoned private bridge lender Onkoure Financial Services. To learn how we can assist with your real estate financing requirements, get in touch with us right away.