Consumer Bridge
What is a Consumer Bridge Loan
A bridge loan is a short-term loan typically used by individuals or businesses to bridge a financial gap between two major transactions. It’s called a “bridge” because it helps you cross from one financial situation to another, providing temporary funding until a longer-term solution or source of capital becomes available. This loan provides the bridge until a client can sell their home and get more conventional financing.
What is the purpose of a Bridge Loan?
B11 Bridge loans are used in real estate transactions where there is a timing mismatch between the purchase of a new home and the sale of an existing one. Our Bridge loan product allows borrowers to compete with cash offers and focus on getting into their new home. Once that process is complete, the outgoing home can be properly staged, yielding higher sale prices. The sale proceeds will pay down the B11 loan and will be refinanced conventionally.
Is a Bridge Loan short term or long term?
Bridge loans are short-term loans, 11 months. Because there are no prepayment penalties allowed, the durations can be several months or even a few weeks. These loans are not intended as long-term financing solutions and are meant to serve as a stop-gap between the purchase of a new property and the sale of an existing one.
Does this loan require collateral?
Bridge loans require collateral to secure funding, such as the borrower’s existing home, the home being purchased, or even other properties the borrower may own. This cross-collateralization allows Arrival to maximize the borrower’s equity to secure the new home, often for the full purchase price.
What are the rates and fees?
Bridge loans come with higher interest rates and fees compared to traditional loans primarily due to their short-term nature but also because of the limited documentation and use of alternative funding sources. The fees are offset by the savings and reduced stress of moving only once, by the higher prices of properly staging a home for sale, and by providing a competitive answer to cash offers. Buyers are often willing to pay a premium price for a home. With bridge loans, that premium is simply in the form of higher fees rather than a higher price
How do I repay this loan?
The borrower is required to make monthly interest-only payments until the loan is repaid. This normally happens through the sale of the current home and subsequent refinancing of any remaining balance.
What are the requirements for this loan?
B11’s bridge loan product has specific eligibility criteria and requirements, primarily creditworthiness and the value of the collateral. Unlike a bank loan, however, income and asset documentation are not required in most cases. Financial stability, verifiable equity, and a reasonable way to exit the loan are the keys to a BluEleven loan.
