With the current banking crisis and more than a trillion dollars in commercial loans coming due, there is a great opportunity for brokers to increase their income significantly in the commercial real estate finance business. The opportunity for brokers and investors is the best it has been in decades.
As balloon mortgages become due many small banks will be taking back much of their portfolio loans. As a result, brokers will need to help their existing commercial clients obtain commercial bridge loans to pay off their existing commercial loan. Commercial investors will now be able to buy commercial properties at a deep discount and use this type of commercial financing for their purchases. This can be truly the best of times for brokers and could potentially be the worst of times for existing commercial property owners without the broker’s help.
Commercial bridge loans are equity driven and must have an experienced borrower, payment strategy and an exit strategy for repayment of the loan. The bridge loan lender’s primary objective is to meet their borrower’s need for short-term bridge financing with efficiency, flexibility, and professionalism.
Lending guidelines for these loans will include: straight purchases, purchasing REO’s, on-performing notes, and distressed assets or refinancing. Loan sizes will range from $2 million to $75 million. All commercial types of properties are usually considered for bridge loans to 75% LTV. Rates vary from 10% to 14% interest only, from 1 to 3 years. The costs for these loans are usually 2 to 3 points and closing time can be expected to be from 10 to 15 business days.
In fact, these are secured loans where you are required to pledge your existing home as collateral. Depending on the equity value of the collateral, lenders approve the loan amount. Although these are secured in nature, the interest rates are relatively high. It is because these loans have a short repayment period which is mostly in between 6 weeks – 12 months. Always keep in mind hard money lenders are savvy professionals and want to deal with like-minded people who know exactly what they are doing. So, be prepared – there’s no such thing as “over” prepared when applying for a bridge loan.
Those with bad credit can freely access the loans, as the lenders have an asset to bank upon. By timely repaying the amount, the very same borrowers have an opportunity to increase the credit score. These loans are available with numerous lenders such as banks, financial institutions as well as with online lenders. But it is the online lenders who are known to offer these loans instantly. You just need to fill an online application form and the amount gets transferred without any delay.
Commercial bridging loans are in a way a chance to elevate your business to a greater height. But before availing these loans, you must compare the quotes. Only after that, you should pick up a particular deal. A person may have a bad credit record due to several reasons like CCJs, arrears, late payment, bankruptcy or defaults. Any person with any of such credit records is being allowed in the commercial bridging loans as for them to a loan to bridge the transaction gaps is necessary.
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