What is bridge financing?
Bridge financing, or bridge loans, are designed to provide temporary financial assistance for individuals or businesses. They are typically used to fill a gap in funding. Bridge loans are usually paid back within a year, and they often have higher interest rates than traditional loans.
Examples of situations where a bridge loan could be right for you:
- You need to use your current home’s equity for a down payment on your new home.
- You started a new job, and don’t qualify for a traditional mortgage for another few months.
- You need to pay off a CRA reassessment.
- You have a large debt that you need to pay off in more than one year.
- Your property has been damaged and you need funds to repair it.
- You have lost your job and you need financial assistance until you find another one.
- You need funds to make upgrades to a new home before the move.
Potential advantages of Graysbrook Capital bridge loans:
- They can provide quick access to capital.
- They can be easier to obtain than traditional loans.
- We offer reduced fees for loans under 60 days.
- We have no early payout penalties in most provinces.
- They can be used for a variety of purposes, such as financing a new business venture or covering unexpected expenses.
Potential disadvantages of bridge loans:
- They are meant to be short-term (if you don’t have a plan for an exit strategy, they may not be right for you).
- They often have higher interest rates than traditional loans (but they can also be the key to eliminating other higher interest payments).
- They may need to be paid back quickly (which can be difficult if you are already struggling financially).
- They can vary in terms, costs and conditions – your mortgage specialist can help you compare your offers.
If you are confident in your ability to repay the loan and need quick access to capital, a bridge loan can be a helpful tool. Again, the goal in a bridge financing loan is to pay out as soon as possible to minimize your costs.
Bridge loan qualification criteria:
The main qualification criteria for a bridge loan is equity. Equity can be in the form of cash, investments, or property. Lenders will also consider your credit history and current financial situation when determining whether to approve you for a loan.
Bridging loan interest rates and other costs:
The interest rate on a bridging loan is typically higher than the interest rate on a traditional loan. This is because bridge loans are higher-risk. Lenders will also charge other fees such as administrative or appraisal fees, which will be outlined in your offer.
Frequently Asked Questions About Bridge Financing
How do I get a bridge loan?
We offer bridge financing for individuals who need money quickly but don’t meet the requirements of traditional lenders. If you live in Atlantic Canada or Ontario, you may be eligible. We work with hundreds of brokers throughout Atlantic Canada and Ontario, contact us for broker recommendations near you so they can evaluate if a bridge loan is right for you!
How much can I borrow with a bridge loan?
The amount you can borrow with a bridge loan will depend on your equity and credit history. We also consider your current financial situation when determining the amount you are eligible to borrow.
What are the repayment terms for a bridge loan?
Bridge loans typically have shorter repayment terms than traditional loans. This is because they are designed to be paid back quickly, usually within a year.
What happens if I can't repay my bridge loan?
If you are unable to repay your bridge loan, you may be required to sell your collateral to repay the debt. This could put you at risk of losing your home or other assets. Before taking out a bridge loan, be sure to consider all of the potential risks and disadvantages.
Are there alternatives to bridge financing?
A loan like a line of credit for gap funding would be ideal, but banks will often not approve many clients once a new debt has surfaced.
- Personal loans can be used for a variety of purposes; however, they typically have shorter repayment terms and higher interest rates than bridge loans.
- A home equity loan is less expensive, but a bridge loan could be more flexible in certain situations (for example, traditional lenders may not offer home equity loans if you are in the process of selling your house).
If you are facing a financial emergency and need money quickly, bridge financing may be the right solution for you. We can help you get the funds you need to get through this difficult time.