| Bridge Loan |
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| CATEGORIES ABOUT BRIDGE LOAN | |
| credit | |
| corporate finance | |
| real estate | |
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The term "bridge loan" indicates it will bridge the borrower to the next transaction. It is a shorter term loan that will be used for interim financing until the following occurs: #The property is sold #The property is refinanced with a traditional lender. #The borrowers credit and or financial picture improves #The property is improved or completed #A business has resumed or improved, or changed in a specific way allowing for permanent financing to occur. Bridge financing is riskier in terms of the borrowers credit history, or in terms of the properties readiness for marketing. The higher risk is taken by investors for a higher yield. Rates are usually 12-15%. Terms are usually 1-3 years. Points or lender fees are usually 2-4. Therefore borrowers usually seek to repay a bridge loan as soon as possible. |
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