Bridge financing is most commonly required when someone purchases a new home at an earlier date then they sell their existing home. When that person needs the proceeds of their sale for down payment on the new purchase, the lender provides this additional financing to BRIDGE the gap between the purchase (of the new) and sale (of the old).
The most important factor in getting approved for this type of financing is that you have a FIRM purchase and FIRM sale agreement in place. Lenders will need to know the exact length of time the “bridge” is required.
There is typically a set up fee to bridge financing (usually between $250-$500), and the amount of the bridge is calculated daily at a rate of approximately prime +2.5%. For example a bridge of $50,000 at prime +2.5% (based on today’s rates) would cost $7.12/per day.
If you think you may need bridge financing for your upcoming purchase, feel free to contact me to get more information.