A bridge loan is a type of short term loan taken out pending the arrangement of larger or longer-term financing. This is sometimes referred to as a “swing loan”. The bridge loan is interim financing for a borrower until permanent financing can be obtained. Money from the new financing is generally used to “take out” or pay back the bridge loan.
We will consider a bridge loan for your project, based on our review of the project and the borrower’s ability to repay the obligation as agreed.
We can arrange a bridge loan quickly and with relatively little documentation. This is important to a purchase real estate transaction to quickly close on a property, retrieve real estate from foreclosure or take advantage of a short-term opportunity in order to secure long-term financing. Bridge loans on property are typically paid back when the property is sold, refinanced with a traditional lender, the borrower’s creditworthiness improves, the property is improved or completed, or there is specific improvement or change that allows permanent or subsequent mortgage financing to occur. The timing issue may arise from project phases with different cash needs and risk profiles as much as ability to secure funding.
Our bridge loan is similar to and overlaps with a hard money loan. Both are non-standard loans obtained due to short-term, or unusual circumstances. The difference is that hard money refers to the lending source, usually an individual, investment pool, or private company that is not a bank in the business of making high risk loans, whereas a bridge loan refers to the duration of the loan.
Our bridge loan is perfect for the borrower purchasing a new residence and who plans to make a down payment with the proceeds from the sale of their currently owned home. The currently owned home will not close until after the close of the new residence. A bridge loan will allow the borrower to take equity out of the current home and use it as the down payment on the new residence, with the expectation that the current home will close within a short time frame and bridge loan will be repaid.
A borrower may need a bridge loan when a property is offered at a discount if the purchaser can complete the transaction quickly, with the discount offsetting the costs of the short term bridge loan used to complete the transaction. In auction property purchases, a bridge loan would be effective when the purchaser has only 14-28 days to complete their long term financing, which may not be viable in that time frame, whereas a bridge loan could be put in place by us very quickly.
Our bridge loans offer interim financing, allowing the borrower financing flexibility. Contact us to determine if this can be the perfect solution for your specific needs.
CA BRE #01307829
1250 Pine St.
Walnut Creek, CA 94596