Bridge loans can give you a competitive advantage

In the commercial market, the competition for acquiring can be fierce. Many sellers will turn down any offer they receive that has a contingency clause (for example, a clause that states the offer is contingent on the buyer financing).  This can be problematic for the buyer who does indeed has to get financing approval.

To stay competitive in a tight market, some buyers make the choice of securing a bridge loan (also known as a swing loan or bridge financing).  A bridge loan covers the gap between the time a buyer closes on their new property and the time in which the new permanent laon is funded.

Typically a bridge loan is structured as a one year loan.  The bridge loan funds the acquisition or refinance, minus closing costs and six month’s of interest, going toward the down payment or refinance.   

If after six months the permanent laon has not funded, the borrower will begin making interest-only payments on the bridge loan.  When the permanent loan funds, the bridge loan is paid-off.  If the permanent loan doesn't fund within the first six months, any unearned interest payments will be collected from the borrower.

This is the typical bridge loan scenario for most buyers.  In some cases a borrowr may qualify for a bridge loan that simply adds the cost of their property and to their current debt. 

A bridge loan can help you make a competitive offer on a property even though your permanent loan has yet to be approved.  If you’d like this extra bit of negotiating leverage, lets get together to talk about your options.  You may contact us at anytime by email or calling 888-669-2825.We look forward to helping you!