UNDERSTANDING BRIDGE LOANS

Bridge loans are short-term options. You use these loans as a stepping stone to permanent funding. Essentially, an investor or borrower uses a bridge or gap loan as an influx of cash to ensure a project or purchase continues as planned until long-term financing is secured, in essence bridging the gap between financing options.

Many situations may call for a gap loan. For example, a borrower may need the cash to put towards a new property while waiting for another to sell. Or, a property investor may need to cover costs until they can place tenets. A bridge loan can also act as financing to purchase, build, flip, or fix a property in the short-term.

BRIDGE LOAN SPECIFICS

Bridge loans are flexible and offer several benefits to the borrower. While the specifics vary depending on the project and client, the general characteristics of a loan are as follows:

• LOAN AMOUNTS: $100K – $50M+
• LOAN TYPES: Single Family, Multi-Family, Bridge Loans, Real Estate Acquisition, Short Sales, Construction Loans, REOs, Bank Foreclosed Properties
• LTV: Up to 70% of the as-is value or purchase price (whichever is lower)
• TERM: 1 – 3 Years
• RATE (APR): 10% – 12.00%
• CLOSING: 1 – 2 Weeks
• AMORTIZATION: Interest only

ADVANTAGES OF OUR BRIDGE LOAN PROGRAM

The primary benefit of our bridge loan program is its flexibility. When investing in a property or trying to complete a rehab, you never know when expenses will pop up. Our program offers rapid intermittent financing to secure your project and get things back on track.

A bridge loan is an intermittent tool, meaning that it is best served for short-term expenses. While we feel that our interest rates are fair, there is no denying the rates are higher than a traditional loan, but that is because of the short window and other risks we take during the process.

MINDING THE GAP

While you can use a bridge loan for several short term expenses and needs, the primary draw is to acquire a property — the typical iteration of a bridge loan as a gap loan signals this reality. The gap refers to the period between purchasing a new property and the sale of an existing one. Most investors or buyers will need the equity from the sale of a piece of real estate to purchase another. The bridge loan helps to finance the new property until you can sell the other.

THE DIFFERENCE BETWEEN TRADITIONAL AND BRIDGE LOANS

There are many similarities between a bridge loan and more traditional funding options, but each is unique. Conventional loans are often more challenging to acquire, and the term limits are focused on longer-term investments (think mortgages). A bridge loan is a short term financial vehicle, and the primary requisite is that the collateral property’s value matches the loan risk. A potentially significant drawback to a bridge loan is the higher interest rate, but the rate is compatible with the term length. Many investors will not mind the higher interest because the barrier to approval is less stringent than with conventional loan programs.

CONTACT US

Are you in between two properties at the moment, or do you need financing to get a property renovation back on track? If so, consider contacting a HML Solutions representative to discuss our bridge loan program. Our team of experienced lenders can work with you to develop a flexible plan that addresses all of your immediate needs, allowing you to keep your investment and survive the intermittent cash flow problems you are currently facing. Our hard money gap loans ensure that qualified applicants have the financing they need when they need it; no need to wait weeks for approval.