Bridge mortgages, also called interim loans or a swing loan, are used if you’re selling one property and need the proceeds from that sale to finance the purchase of another property. You can use bridge loan financing for a home purchase, or you can take out commercial bridge loans for your small business.
Mortgage bridge loans are available in two types. The first swing loan option uses your current property as collateral, allowing you to close on the new space, pay off the old mortgage and raise cash for the down payment on the new property. Monthly payments are not usually required; you simply pay off the balance when the old property sells. The second type of bridge loan financing involves keeping your current mortgage, borrowing against your current property’s equity and using that money as the down payment on the new property.
The best contacts and resources to help you get it done
Your local bank is a good starting point for bridge loan financing
Many commercial bridge loans and residential bridge loans are given through local lenders who understand your area's real estate market. Compare rates at local banks that offer gap financing.
I recommend: Search by city for local lenders with
LocalLender.info or
USCITY.net. Also
MortgageLoan.com lets you search their list of lenders, many of which offer interim loans.
Shop for bridge mortgages with national lenders
National banks offer bridge loan financing. Go to the national lender where you have your initial mortgage and bridge loans may be easier to secure.
I recommend: Check with national lenders, such as
GMAC Mortgage and
Wachovia for bridge funding. Or check out
Equifax, which offers a nationwide mortgage referral service, so you can get a list of lenders who offer bridge loans for mortgages.
Find a lender that specializes in mortgage bridge loans
Depending on how risky or specialized the funding you need is, another tack is to work with specialty lenders. Take note that the swing loan rate may be higher with lenders that specialize in gap financing than with a regional or national lender.
I recommend: For residential or commercial bridge loans, check major lenders, such as
Security National Capital,
Mercury Capital and
People’s Choice Commercial Lending. Some lenders, such as
GE Real Estate,
Madison Realty Capital, 1st Bridge and
Fairfield Financial Services specialize in commercial bridge loans, especially for larger projects.
Vet lenders before accepting bridge loan financing
Make sure the bridge funding lenders you're considering haven't been reported by borrowers for unethical business practices and are in good standing with state and federal regulators.
I recommend: Contact the
Better Business Bureau to find a BBB chapter in your state or city to check on lenders offering mortgage and bridge loans.
Get bridge loan information from the experts
Real estate blogs written by experts are a great resource for boning up on mortgage and bridge loans.
I recommend: C-Loans.com, a commercial real estate blog, includes info on mortgage and bridge loans.
ActiveRain and
Searchlight Crusade are also reputable blogs written by industry experts that cover mortgage bridge loans.
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