A bridge loan is a real estate loan that connects or "bridges" 2 steps in a project.
Although the term usually refers to commercial projects, a bridge loan can be used for residential lending as well. For example, a homeowner being transferred to a new area may need to purchase a home in the new area before the sale of the current home can close. In this case the homeowner could get a bridge loan (also called a second mortgage) on their current property to provide the cash needed for down payment and related expenses on their new property.
A commercial bridge loan is typically used when money is needed in the early stages of a development project before the entitlements, such as zoning, have been secured and therefore before the construction lender will make their construction loan.
Companies that make commercial bridge loans are a crucial part of the development process and because their position has higher risk, they get a higher reward. These companies provide a bridge loan to "bridge" the gap between developer equity and the construction loan, making it possible to the project to proceed.
We have experience in residential and commercial bridge financing and would be happy to answer your questions. Simply use our contact form and write "bridge loan" in the comments section.
