With Dual Loan Payment ScheduleBridge loans are most commonly reserved for real estate financing though they don't have to be. A bridge loan is usually a short term loan that provide funds for purchasing an asset (such as a home) when the cash-on-hand along with the primary loan is not enough to pay for the asset.
For example, if you currently have $50,000 cash and a home that you are selling for $400,000 for which there is a balance on the mortgage of $200,000 and you plan to buy a home for $800,000, you might be a candidate for a bridge loan.
If the lending institution for the new mortgage requires that you put a deposit of 20% down, $160,000, at closing, you will not have the cash if the closing has not taken place on your current home. This is where a bridge loan can be used.
$800,000 new home
-$50,000 cash on hand
-$640,000 mortgage available
$110,000 covered by bridge loan
The new home mortgage will be $640,000 (800,000 - 160,000 = 640,000). The selling price less the cash on hand and the mortgage money available leaves a short of $110,000. This is the amount covered by the bridge loan. A bridge loan is typically an interest only loan. This means you make only interest payments. The loan is also usually a short term loan offered at a higher interest rate. The idea is that once the first property is sold, the bridge loan will be paid off immediately from the $200,000 net proceeds from the sale of the first house.
That's the background. This calculator will calculate your total payment for the primary new mortgage and the interest only bridge loan payment. The bridge loan has no term for it is due when the closing occurs on the first house. The only thing you have to know about the bridge loan is the annual rate of interest you'll be charged.
"Anticipated Bridge Loan Term? (#)" — Enter number of months you anticipate needing a bridge loan. That is, how many months you think it will be until you close on the property you are selling. This value does not impact the bridge loan amount. It impacts the payment schedule and charts.
This calculator makes these assumptions:
1) payment for both loans are made monthly
2) the bridge loan is an interest only loan (payments never go toward principal)
We are currently building a new home in another state but our first home has not sold. It is a larger home which tends to sell more in the spring season. The builders want us to close in December. We have over 300k in equity in this house and are planning to put down 160k for the down payment of the second. My husband and I are retired but my husband is still doing contract work. Would a bridge loan be a good option for us?
A bridge loan is certainly designed for this scenario. However, I’m not the one that should be answering the question. Interest rates and laws, just to mention two variables, change from location to location. It is best to get local advice. That’s why I try to limit support to how a calculator is used.
I’m not quite sure what the calculator means by cash available. Is it asking if you have any extra cash to put down on the new home before closing or is it asking how much equity is in the old home?
Also, for the first mortgage blank, are they looking for the original mortgage agreement? House was originally purchased at 473k but we have 300 in equity at this point.
Good questions. I certainly need to update the documentation.
The "cash available" is any cash you might have that you want to put toward the new property. This is cash-on-hand (or perhaps extra cash, though I don’t know what that is ;-), not cash from the sale of another property.
The "first mortgage" is the new, primary mortgage amount on the property being purchased. It is called the "first mortgage" with the balloon loan being the second mortgage.
If this doesn’t clear this up, please let me know.
We are wanting to borrow about 130K to 150K to purchase a ranch style home while we sell our other house (in WV). We own two houses without mortgage except a 50K home equity on our residence property in Florida. I’m not sure seller will wait on our home to sell so we should pay cash. ——couple possible problems: the house we want to buy is just over a flood zone boundary and it will not be our primary residence (summer home). We have great credit in high 700’s and enough money in IRA to do this 4x. BUT hubby does not want to withdraw IRA money because of taxes.
Sounds as if you might have to do some juggling. Is there a question here that I might be missing?
The house we own now is paid in full and is valued at 121,000 and we have it listed for 106,900 figured it would be a quick sale but that hasn’t happened . We found a double wide and some land for 40,000 we want. Both houses r in wv . What do I need to do first with doing a bridge loan and how much will the payments be on the bridge loan .
It’s not clear to me that you need a bridge loan. Do you plan to have a mortgage on the new property after you’ve sold and settled on your current house? If not, then you don’t need what is considered, in a traditional sense, a bridge loan. A "Bridege Loan" is a 2nd loan or mortgage on the NEW property that will be paid off when the 1st property is sold.
If you plan to pay off the loan after the first property is sold, you can use this
You say can use this . . Please, use what instead of a bridge loan??
You can use "this", that is, this bridge loan calculator.
If you are paying off a 2nd loan on a new property after the first property is sold, then a bridge loan is appropriate.
Lets approach this in a different way, what do you need to accomplish?
I own a home in Florida, no mortgage, paid cash back in 2003. I want to buy a smaller home in Georga, however, to do so I would need a bridge loan. I plan on selling it but not yet, it is valued at $265,000. The idea is to get a bridge loan to purchase a condo in Georgia and pay it off when my house in Florida sells. Is there a specific amount of time that the bridge loan must be paid off?
The bridge loan is paid off when the house that is providing the security for the bridge loan is sold.
You could also look into getting a home equity line of credit on your first home to pay for the second home. It too would be paid off when the first home is sold. The HELOC loan is, in essence, a bridge loan.
I am currently looking at a property to renovate. ill be buying it for £80,000. Ill spend about £20,000 on it and it should be worth around £130,000 when i’m finished. I don’t know how to use the calculator but im looking on getting a bridge loan to buy the property then hopefully pay back with in 6 months. Can you give me details on how much ill be able to loan and how much repayments will be.
Thankyou
Do you have another property? A bridge loan is for when you are buying one property and selling another property and you want to close on the property you want to buy before you sell the 2nd property. The 2nd property, the one you are selling provides the collateral for the bridge loan.
If the 20,000 is for renovations, then it sounds to me as if you need to borrow the full 80,000, unless you have other cash or collateral that you did not mention.