Bridge Loan Terms of Payment

e-dennis.net In a bridge loan, the borrower usually has to pay only the interest on the loan every month. This term continues until such time that the existing property is sold. Then, the proceeds from that property will be used to repay the principal.
Determining the interest rate of bridge loans depends on a few factors. The risk associated with the bridge loan is assessed as well as the current interest rates. The lender's premium will also be factored in.
Bridge loans normally have higher interest rate compared to other kinds of loans. This is because bridge loans last just for a few months so the lender can only profit from the loan for a short period of time.
The length of time of the bridge loan's term of repayment is directly proportional to the amount of the interest a borrower will pay the lender.
An addition collateral is usually needed. Usually the borrower presents another property as a collateral.