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How to use this Bridge Loan calculator...
Bridge 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)
Louie O says:
Selling my current house for $360,000 (owe 316k) @ a 3.185% and buying a new one for 436k. I have 40k cash but only want to put down 5%. Does this mean that it will cost me 2k a month for the loan?
Karl says:
Sorry, but I’m not following you. This calculator tells the user if they will need a bridge loan.
In my head, it doesn’t look as if you need a bridge loan. You are buying a home for $436k and you want to put down 5%, which is $21,530. You already have more than enough cash for the 5% down payment. No bridge loan is needed. The question is, will the lender issue the loan per the terms you want?
What question are you trying to answer?
Mark B Weyland says:
I want to relocate in the same area but into a smaller house.
I currently own my house which is worth ~$400,000.
Due to the sellers housing market in Sarasota, I want to buy a home before selling the existing property. I hope to buy at around $300,000-350,000. I can put down a 20% deposit.
Is a bridge loan the only option for me ?
Karl says:
Your question is about what financial products might be available to you. Those I can’t answer (I don’t know your personal situation. Nor do I know what financial products are available in your area.)
Do you have a question about how the calculator works or the results you are getting?
william says:
current mortgage:
home value: $200,000
amount owed: $140,000
current rate: 5%
I want to purchase a home while I sell my current home.
new home purchase price: $470,000
need 5% down
have $5,000 cash
can I secure a bridge loan to purchase this new home?
Karl says:
Are you asking how to use the calculator?
Since you do not have the cash required for the down payment but you do have adequate equity in your current home, a bridge loan might be a good source of funds for you.
Your entries might look something like this. (I’ve estimated the bridge loan interest rate.)
Randy Johnson says:
Generally how long does pre-approval take?
Karl says:
I’m only able to answer questions about the calculators on this site. Pre-approval depends on factors that I have no knowledge about, such as your credit history and even perhaps where you are located.
Maureen O'Donnell says:
Not sure what to enter on the calculator. Not sure what it means when it says first mortgage. We own a home valued at about 260,000 in which we owe about 90,000 with 52 months left on a 15 year mortgage. We want to buy a 2 unit home for about the same value as our home with our home to sell within 12 months. Limited cash for down payment. Current interest rate is about 4 percent.
Karl says:
I certainly need to add some instructions to this page. Sorry not to have been clear.
The calculator answers the questions, "Do I need a bridge loan?" and "If so, how much will it be?"
The "first mortgage" is the primary mortgage for the new home.
So, if you the new, 2 unit home will cost about 260,000 and you plan to take out a primary mortgage of about $208,000, then your first mortgage is $208,000. If you enter the cash available, then the calculator is going to calculate the size of the bridge loan that you’ll need. Compare that to the equity you have in your current home to see if you can use it for collateral for a bridge loan if needed.
Hope this helps.
Kenneth Bulas says:
currently in attorney. Selling price of current home is $480,000. No mortgage. Need $180,000 for purchase of new home. Bridge loan needed for 2 months to close on new home before closing on current home. How do I fill out the chart.
Karl says:
I certainly see that I need to add more documentation for this calculator.
The $180,000 for the new home, is that the total purchase price? Or, what’s the cost of the new home, and how much will the new mortgage be (that the value for 1st mortgage)? Do you have any cash-on-hand?
The point of this calculator is to see if you need a bridge loan, and if you do, calculate a total payment of the new mortgage and the bridge loan.
Karl says:
You already understand that you’ll need a bridge loan. If you are not taking out a mortgage on the new home, and the bridge loan is the only loan, then this calculator is not what you need (it is for when there are two loans on the new property).
Use this loan calculator to calculate the details and create a schedule for the bridge loan.
Cat says:
What is the average monthly interest rate for a mortgage bridge loan through a b or c lender in Canada?
Karl says:
Sorry, but I don’t track interest rates.