Real Estate

Bridge financing rates

  • Last Updated:
  • Sep 2nd, 2020 10:27 pm
[OP]
Newbie
Apr 27, 2020
7 posts
2 upvotes

Bridge financing rates

Hi,
I am wondering if anyone had success in negotiating bridge financing rates?
It appears the bridge rates are hovering around 5-6%

Can someone explain how a HELOC can reduce the bridge amount? I assume it's because I can use equity in my current house and apply it as a "down payment" on the new house.
Thanks
5 replies
Deal Addict
Jan 15, 2017
3516 posts
2867 upvotes
Bridge financing rates are usually higher because as bridge financing is usually for a short period of time, it costs the lender a lot of administrative costs to set it up and it is difficult to recoup these costs and make money on the financing.

Lenders also want a higher rate on bridge financing to help motivate the borrower to actually sell the home. Last thing that the lender wants sometimes is for the buyer to suddenly own two properties if they cannot afford to carry two properties.

Keep in mind that bridge financing is only available when you have a firm offer (no conditions or all conditions removed) on your current home.

A HELOC will most likely cost you less vs bridge financing. Yes, you can use the equity in your current house as the down payment for your new home.
Member
User avatar
Aug 20, 2020
351 posts
60 upvotes
Scarborough
LaurenceS518509 wrote: Hi,
I am wondering if anyone had success in negotiating bridge financing rates?
It appears the bridge rates are hovering around 5-6%

Can someone explain how a HELOC can reduce the bridge amount? I assume it's because I can use equity in my current house and apply it as a "down payment" on the new house.
Thanks
Can you share the complete scenario? Are you selling your current house?
Neil Joseph
Mortgage Agent, Broker Lic #10530
[OP]
Newbie
Apr 27, 2020
7 posts
2 upvotes
Hi - yes my house has been sold and I need to bridge for two weeks.
Given that the both the sale and purchase are over $1 Mil, the interest hit on a 6% bridge is quite large.

Looking for options / strategies to reduce this.
Deal Addict
Jan 1, 2017
1176 posts
1019 upvotes
LaurenceS518509 wrote: Hi - yes my house has been sold and I need to bridge for two weeks.
Given that the both the sale and purchase are over $1 Mil, the interest hit on a 6% bridge is quite large.

Looking for options / strategies to reduce this.
Isn’t it just $2,300-$2,500 in interest for the two weeks?
How much were you expecting to pay?
[OP]
Newbie
Apr 27, 2020
7 posts
2 upvotes
Yes it likely is about 2700$

That being said if I could pay less it would be better!

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