When to Opt for Bridge Financing in Property Deals?

Trying to buy and sell property at the same time is challenging enough. The best possible workaround to ease the financial burden under these circumstances is using bridge financing — a funding strategy where investors use mortgages to finance the simultaneous buying and selling of a property. According to a study, more than half of all the second homebuyers use a mortgage rather than paying cash.


That said, bridge financing has its pros and cons and therefore, you should know when it works the best.

Understanding bridge loans

As the name suggests, a bridge loan is a form of short-term loan used to bridge the gap between permanent financing and removing the existing obligation. It is essentially a sum of money lent to an investor to cover an interval between two transactions — in­ this case, the buying and selling of the house.

How does bridge financing work?

Bridge financing helps homeowners and investors leverage their equity in their current residence so they can purchase a new one.

This “gap-financing” strategy is generally aimed at tackling immediate cash needs. Following are the most common bridge financing options.


Multiple equity loans

Having two mortgages isn’t as rare as you might think. Individuals who have sufficient equity in their homes often choose to hold two loans.

In this scenario, the investor borrows the difference between their current loan balance and up to 80% of their home value. The funds in this second mortgage are used to for the down payment of the second property, while the first mortgage remains intact until the old residence is sold and the investor is ready to pay off all the dues.


Combine the mortgages

In this case, you can borrow up to 80% of your home value at a single time. This solution allows the investor to pay off the balance of their first mortgage and then go for the second one when the down payment of the next home is required.

How bridge loans can help you

Let’s have a look at some advantages of bridge loans.

Flexible buying options

Sometimes investors find a suitable property for their business before they get a buyer for their old ones. Other times they need to finance a project while waiting for the approval. Under this situation, your best bet would be to go for a bridge financing option. It provides the investor with flexibility in financing to buy a new home while the other one remains available in the market.

Qualifying requirements

Unlike other mortgages, bridge financing does not have strict qualifying standards. They are given out on a case by case basis and you don’t need to cut through any red tape.

Securing assets

If, due to any unforeseen circumstances, you are unable to pay back the loan, the lender will not be able to get any of your personal assets. They will, however, foreclose the case on your old property.

When to opt for bridge financing?

Here are the most common situations when bridge loans are preferred.

  • If your business is looking for long-term financing and needs to cover the expenses in the intervening time.
  • If you are dealing in real estate and experience a lag between the purchase and sell of two properties.
  • Your business is looking for partner buy-out
  • If your business is behind in the mortgage payments and you want to avoid foreclosure.


Plan ahead

financial contract between two people

The simultaneous buying and selling of properties requires adequate planning. If you want everything to go smoothly, your best bet would be to go for bridge loans.


Global Capital Partners Fund is a private Global commercial lender in NYC, offering bridge loans for retail shopping centers, mixed-used projects, multi, family commercials, office buildings and hotels.


In addition to bridge loans, they also offer other financing solutions such as, commercial financing for land, acquisition and development loans, structured joint venture financing, commercial real estate funding, bridge loans, hard money loans, joint venture financing and hard money loans in New York.

Feel free to get in touch  with them and learn more about how Global Capital Partners Fund can help you with bridge loans and other financing options.


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