Bridge Loan Calculator
Calculate bridge loan costs for short-term financing needs. Bridge loans provide temporary financing to "bridge the gap" between selling one property and buying another, or during major renovations.
Loan Summary
Fee Breakdown
Cost Analysis
Bridge Loan Requirements and Uses
Common Uses
- Home Buying Gap: Financing between selling current home and buying new one
- Investment Property: Temporary financing for real estate investments
- Renovation Financing: Funds for major home improvements
- Business Needs: Short-term business financing
- Emergency Funds: Quick access to cash for urgent needs
- Debt Consolidation: Consolidating high-interest debt
Loan Characteristics
- Terms: 6-12 months typically
- Rates: 7-12% interest
- Fees: 2-5% origination
- Payments: Interest-only usually
- Collateral: Real estate or assets
Qualification Requirements
- Credit Score: 680+ typically required
- Equity: 20-30% equity in collateral
- Income: Stable income documentation
- Collateral: Real estate or valuable assets
- Exit Strategy: Plan to repay the loan
- Debt-to-Income: 50% maximum ratio
Advantages & Disadvantages
Advantages:
- Quick access to funds
- Flexible repayment terms
- Bridge financing gaps
- Higher loan amounts
Disadvantages:
- High interest rates
- Expensive fees
- Short repayment terms
- Risk of default
Understanding Bridge Loans
Bridge loans are short-term loans designed to provide temporary financing during transitions. They "bridge the gap" between financial needs and permanent financing solutions, typically lasting 6-12 months.
How Bridge Loans Work
Bridge loans provide quick access to cash secured by real estate or other valuable assets. They fill temporary financing gaps when traditional loans take too long to process or when you need funds before permanent financing is available.
Interest-Only Payments
Most bridge loans require only interest payments during the term, with the principal due at maturity. This makes them more affordable for short-term needs but can result in large balloon payments.
Higher Costs
Bridge loans compensate for their short-term nature and quick funding with higher interest rates and fees. They're designed for borrowers who need money fast and are willing to pay a premium.
Exit Strategies
Successful bridge loans require a clear plan to repay the funds. Common exit strategies include selling an asset, securing permanent financing, or using investment returns to pay off the loan.
Risk Considerations
Bridge loans carry higher risk due to their short terms and high costs. Defaulting can result in foreclosure or loss of collateral. They're best used when you have a solid repayment plan.
Tip: Bridge loans are expensive and should only be used when necessary. Always explore cheaper alternatives first and ensure you have a clear repayment strategy. Work with lenders who understand your specific situation.