Bridge Loan
You have funds today for your project, and you know you can secure funds for a year from now. But figuring out what happens in between can be scary business.
Miel Financial consultants can help simplify the process and make it a lot less daunting. Miel Financial has helped clients identify and close bridge financing, which is generally low cost and is used to help clients “bridge the gap” between what they have today and what they will have tomorrow.
Just like the name implies, a bridge loan is a solid option to help a client move from one point to another. Used in commercial and residential lending alike, a bridge loan is another viable lending option for brokers to be aware of.
Exit Strategy Required
Clients must understand that lenders will require a specific exit strategy before making a bridge loan. If a very clear, precisely drawn exit strategy does not exist, the lender will not move forward with the bridge loan and might refer the client to a different kind of loan type. Miel Financial’s expertise with bridge loans will help brokers and their clients prepare a loan request with the highest chances of identifying and obtaining financing.
Miel Financial regularly works with clients to identify and secure bridge lending, most notably for purchasing a secondary property, often times before their initial property has completed the sales cycle. Miel Financial can help you strategically prepare a package that is attractive to lenders and that explains why you are requesting financing and how it will be paid back to the lender, under what terms and within what time frame.
Miel Financial’s understanding of bridge loans can also help you close your loan more quickly. Miel Financial will help you clearly articulate your repayment plan, significantly reducing the underwriting process and allowing the transaction to complete more quickly.
Not Hard Money
Clients can trust Miel Financial to understand the difference between a bridge loan and a hard money loan, even though the two are frequently confused. Both bridge loans and hard money loans can be quick to close, are used for a relatively short period of time and have limited or less severe underwriting processes, but significant differences exist between the two loan types.
Miel Financial clearly advises its broker and client contacts of these differences:
Again, bridge loans absolutely require a definitive exit strategy.
A bridge loan frequently has a higher loan to value ratio (70 to 95 percent), whereas a hard money loan will not exceed 50 percent loan to value.
Points and fees associated with a bridge loan are low and the rates are generally inexpensive, unlike a hard money loan, which is known for being costly.
Bridge loans focus heavily on the exit strategy, causing the risk profile to be reduced significantly. Because of this the lender does not rely as heavily on reviewing collateral (as would be the case with a hard money loan) as a means to repay the debt should a problem arise.
What to Remember
Call Miel Financial today to learn more about bridge loans and how one might be a viable option for you. Miel Financial can help you identify the solid exit strategy you will need in order to secure a bridge loan. Miel Financial can guide you to provide a purchase agreement that verifies that there is no mortgage or structural contingency, which will signal to the lender that the loan can and will be repaid.
Also, if clients don’t qualify for a bridge loan, and are asked to take out a hard money loan, Miel Financial can help you identify hard money financing, as well. Miel Financial’s broad experience with a multitude of loans means that you have a trusted financing source to help you, no matter what you need.