Real estate bridge financing (also Bridge Finance)
Die Real Estate Bridge Financing is a form of short-term financing that allows buyers, to finance the purchase of a property while waiting for long-term financing. This type of financing is often used by real estate investors, who want to react quickly to attractive investment opportunities. Bridge loans usually have a short term, high interest rates and often require collateral such as the property to be financed itself. They often serve as “Bridge” between purchasing the property and long-term financing, such as a mortgage.
Reasons for real estate bridge financing
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Buying a new property before selling the old one
If you want to purchase a new property before selling the current one, you can use bridge financing, to finance the purchase, until the proceeds from the sale of the old property are available.
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Delay in selling a property
If selling your current property is taking longer than expected, you can take advantage of bridge financing, to bridge the time until the sale is completed.
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Revitalization or renovation of a property
If you purchase a property that requires renovation work, Bridge financing can be used, to cover the costs of renovation, before securing long-term funding sources.
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Time discrepancy between purchase and mortgage approval
There could be situations, in which the commitment for a long-term mortgage is not made in time for the property purchase. In such cases, bridge financing can close the financing gap.
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Inheritance or gift
If you receive a property through inheritance or gift and the exact financial situation has not yet been clarified, Bridge financing may be temporarily necessary, to cover certain costs.
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Real estate project development
Real estate developers can use bridge financing, to meet short-term capital needs during various phases of a real estate development project, until long-term financing sources are available.
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Fast property acquisition
In situations where you have to act quickly to purchase an attractive property, Bridge financing can be used, until you can secure long-term financing.
It is important to note, that bridge financing is usually associated with higher interest rates, as they serve as short-term solutions. Before you decide on bridge financing, It makes sense to consult with us to make sure, that this option is the best solution for your specific situation.
Frequently asked questions about real estate bridge financing
In this section we provide answers to frequently asked questions related to real estate bridge financing, to give you a comprehensive insight into this financing option. From basic definitions to detailed aspects of the application.
Real estate bridge financing is a short-term financing solution that serves this purpose, to close a temporary liquidity gap when purchasing a new property, before the funds from the sale of an existing property are available.
Bridge financing makes sense, if it is e.g. There are time discrepancies between the purchase of one property and the receipt of funds from the sale of another.
The duration of bridge financing varies, but can usually range from a few months to a year. It should aim for that, to bridge the period of time, until long-term financing is secured or a transaction is completed.
The costs may vary, but bridge financing is usually more expensive than long-term financing. They may include higher interest rates and additional fees such as:. a higher set-up fee.
Repayment is usually made by selling the old property or by taking out long-term financing as soon as the funds are available.
And, there are risks, especially if e.g. the sale of the old property is delayed or if unforeseen problems arise. It is important, carefully weigh the risks.
Real estate bridge financing can be used for both residential- as well as for commercial real estate. The application depends on the specific needs of the real estate project.
FINANCE RE has a broad network with a large number of bridge financiers.
- We analyze your property or. Your project.
- On this basis we select, among other things:. with the help of our market know-how and our database suitable partners.
- Your project will then be prepared in a targeted manner and placed with potential investors.
- We oversee this tender process, control Q&A (Question answer) processes and provide advice.
- After obtaining the offers, we will discuss them with you.
- We support you in managing the drafting of the contract and are also at your side as your advisor beyond the payment.
Contact us now – we look forward to getting to know you and finding out more about your project.