Bridge Loans Phoenix AZ

Bridge Loans Phoenix AZ

Your Source for Bridge Lenders in Arizona

Capital Market Funds, located in Scottsdale, AZ, is a proud leader of bridging loans in the Sun Valley. Please contact us today and talk to us about sourcing your bridge loan.

What are Bridge Loans?

These are short-term borrowings. Usually taken for a period of 2 weeks to 3 years to bridge for the pending larger and long-term finance.  These are called swing, mezzanine or caveat loans. These fill the gap in the finances and offer short-term liquidity needs backed by a collateral. These could be precious or luxury items, inventory, debentures or equity. These can also be used for collateralization where the equity used for one loan can be used as collateral for another.

These lendings are aimed at amateur real estate developers, landlords and trustees who purchase and auction properties. These finances are designed to help wealthy or asset-rich people complete purchases before disposing of the existing property. They are also used to remove the existing obligation by providing immediate cash flow. Thus, are also known as interim finances due to their bridging nature. This means they allow a person to fulfill the need for finances while going from one financial arrangement into another.

The LTV ratio may be lower depending upon the risk-taking ability of the lender. People acquire bridge loans to buy another house before selling the existing one. You can also use this finance to get a buy-to-let or property for development and investment. As the number of applications for mortgages to banks has increased the time for the application to be successful is more. Meanwhile, the applicants meet their requirement for the money via this type of financing.

Another purpose of these options to borrow is to help pay the down payments on the new house. While the existing house is sold to cover the rest of the cost of the new property. Here is another situation where mezzanine finance helps. Suppose a company is currently into equity financing and expects to close in 6 months. It may opt to borrow to cover the rent, payroll, inventory, utilities etc., until the larger funding is approved.

Period

The rates vary from lender to lender and they even fluctuate. Suppose you borrowed at 8.5% and it does not carry any payment for 4 months. Yet the interest will be accrued and due at the sale of the property or end of the term of the loan. The mortgage broker may charge a fee for administration, appraisal, escrow, title policy, notary, wire and recording fees. There is also an origination fee based on the borrowed amount. The brokerage varies depending upon the size of the loan.

Types

The two types are closed bridge and open bridge. The closed bridge is set on planned and predefined terms of repayment. While the open bridge plan has no such roadmap. People usually lend in the open bridge conditions under 3 conditions;

  • when the person is an acquaintance.
  • the lender has a long-standing relationship with the borrower.
  • the borrower has a good credit rating.

How to Qualify

You need to have…

  • a good credit rating
  • a property or equity to place as a collateral
  • a road map for repayment
  • a good working relationship with the lender.