Imagine you are planning to buy a house. But you have your own already. And to get a new one you need to sell your old house and you haven’t offered it for sale yet. Then your real estate agent offers you bridging loan.
Bridge financing or swing loan is a short-term financing which is expected to be paid back relatively quickly, such as by a subsequent longer-term loan.
You should remember that bridge loan is more expensive than permanent loans.
Often a commercial borrower needs a bridge loan to facilitate the financing of a property for a short period of time. A bridge loan is a specially designed form of financing that is used when a borrower is expecting to sell a property quickly or refinance it within the near future.
Commercial property bridge loans are typically paid off when the owner places permanent financing on the property, after the improvements are completed and the new tenant(s) move into the property. Because of their short term nature, most bridge loans have no prepayment penalty
To get the idea of your bridge loan you can also try bridge loan calculator. There are some on web.
