Need A Bridge Loan? Get Approved Today!
A Bridge Loan is a short-term loan that helps homeowners bridge the gap between the time that they receive money from the sale of their current to the time that they require the money for the down payment for their new home. At Maxium, we specialize in providing bridge loans for new home or commercial property purchases to borrowers even if they have not yet sold their original property.
You as a homeowner will most likely buy more than one home and move at least a few times throughout your life. You might need to change locations for work or personal reasons, you may want to upgrade to a bigger or newer home, or you may decide to downsize to a smaller home. Whatever the reason, you will most likely want to use part of all of the money you earn when you sell a home towards the down payment of a new home. In some cases, people find themselves in a situation where their closing date for buying their new home falls before the closing date of selling their current home.
In other words their house has not sold in time to give them the funds to put a down payment on the new home they are purchasing. This is where a bridge loan can really help by using the equity in your current home as collateral for a loan to put towards the purchase of your new home. This type of loan is usually a short term solution that ranges from a few months all the way up to one year. Maxium can help you get this kind of loan using collateral like real estate or other assets.
How Much Money Can You Get With A Bridge Loan And For How Long?
Lenders will need to evaluate a borrower’s specific situation in order to give a borrower a maximum loan amount. Based on this information, the lender will also determine how much time the borrower will have to pay the loan back. In most cases lenders are comfortable lending up to $200,000 for as long as up to 1 year. If more time or money is needed, the lender will need to consider various factors in order to decide if you qualify. Keep in mind for larger and longer loans a lien may need to be registered on your property. A qualified mortgage agent can help you determine the best course of action to take, and find the right lender for your specific needs and situation.
How Is A Bridge Loan Calculated?
Here’s a simple example to help you better understand how a bridge loan is calculated. If you are looking to purchase a new home and the closing date is in 25 days, meanwhile the closing date for the house you are selling is in 75 days a bridge loan would cover the required for the 50-day period (75 days – 25 days = 50 days) after you close on the purchase.
To better understand the process lets use an example, you are purchasing a new home for $500,000 and you have put down a 5% deposit (in this case that would be $25,000), but you wish to use the remaining $240,000 of equity in your current home to put towards your new home. The problem is that there is a 50-day gap between the sale of your current home and the closing date for the purchase of your new home. This leaves you with insufficient funds to close on the purchase in time. In this scenario a bridge loan would be ideal choice to help “bridge” together the gap between the selling of your current home and the purchase of your new home. A bridge loan will give you the funds to pay the difference between your deposit and your total amount due while you wait for the sale of your original property to close.
Are There Any Additional Fees?
As with any loan, a bridge loan has interest, though it is generally similar to a rate you would expect from a personal line of credit. You can expect a bridge loan to be higher than your first mortgage rate, and it generally falls around the prime rate + 2% mark. In some case it can be up to 3% over prime, but that depends on a variety of factors. A bridge loan is issued over a short period of time, and will be repaid when the equity of your previous home is collected after the sale closes.
Typically in addition to the small interest applied to you loan there is a flat administration fee which is usually between $200-$500. If you need a loan that is more than $200,000, the lender might register a lien on your property. In this case you will also need to hire a real estate lawyer when you pay the loan back and want to remove the lien. Your mortgage agent can provide you with 3 or more different real estate lawyer recommendations if you don’t have one already.
How To Qualify For A Bridge Loan?
To apply and qualify for a bridge loan you will need to provide the lender with a copy of the original purchase agreement for your new home, and a copy of the sale agreement for your current property. However if your closing date is not firm, then you will need to turn to a private lender because most banks and traditional lenders will require a firm closing date in order to approve you for a bridge loan.
How Can Bridge Loans Be Used For Businesses?
If you are a business and find that you are waiting for long-term financing, but you need cash to manage expenses in the meantime, than a bridge loan might be a great temporary solution. A business bridge loan can help cover utilities, rent, payroll, inventory costs, and more while you wait for your long-term financing is ready.
How Do Bridge Loans Work In Real Estate?
A bridge loan can be an ideal tool to gain access to some funds using the equity of your current home to act as collateral for the loan to go towards the purchase of your new home. This is particularly effective when there is a delay between the sale of a property and the purchase of another, as the bridge loan can give them the funds they need immediately to help close the deal on their new home purchase. This type of loan is provided to borrowers with good credit score and a low debt to income ratio.
In essence a bridge loan bridges together 2 mortgages of your two homes, which gives you flexibility when waiting for your home to sell. Bridge loans d0 have some risks to consider, so for that reason lenders generally offer bridge loans for real estate at no more than 80% of the combined value of the two homes. This can leave the borrower needing to have a substantial amount of home equity, or a large amount of savings. Maxium is a specialists when it comes to providing bridge loans even in the trickiest situations. If credit, income, or loan to value is a problem, ask Maxium about your options.
If you need a bridge loan ASAP, Maxium Dsouza can help you get APPROVED and get your money in as little as 48 hours!
Call or text Maxium today at 437-353-9977 or email us at info@maxiumdsouza.ca to speak about your situation.