Luxury Bridge Loans
Your Gateway to High-End Real Estate

Get a FREE quote! Quick & Easy

As an expert in luxury real estate financing, I'm here to guide you through the intricacies of bridge loans for high-value properties. This comprehensive guide covers everything you need to know about luxury bridge loans, from eligibility requirements to application processes and beyond.

What is a Bridge Loan?

A bridge loan is a short-term financing solution designed to "bridge" the gap between the purchase of a new luxury property and the sale of your existing high-end home. These loans are particularly valuable in the luxury real estate market, where timing and flexibility can make or break a deal.

Why Consider a Bridge Loan?

Luxury bridge loans are necessary when you've found your ideal high-end property but haven't yet sold your current home. They provide the financial means to act swiftly in competitive markets like Beverly Hills, Santa Barbara, Newport Beach, Carlsbad, West Lake Hills in Austin, or Miami Beach.

Eligibility Requirements

Who Qualifies for a Luxury Bridge Loan?

Bridge loans for $1M+ properties cater to high-net-worth individuals who meet the following criteria:

  • – Minimum credit score: 680 FICO scores
  • – Loan amount request from $1M-$10 million
  • – Equity in an existing property worth more than $1 million
  • – Able to demonstrate a viable exit strategy such as your home selling or refinance
  • – DTI: Below 45 or disregarded if your current home is listed for sale
  • – Employment and asset verification: Reviewed for borrower strength

Bridge Loan Interest Rates and Terms

Interest Rates for Bridge Loans

Bridge loans come with higher interest rates due to their short-term nature and increased risk for lenders. Unlike traditional mortgages, luxury bridge loans often offer a single interest rate regardless of whether your credit score is 700 or 780.

The rates range from 9-10%.

Fixed Rate and Interest Only Bridge Loans

  • Fixed Rate:   Pay a fixed principal & interest monthly payment after closing
  • Interest-Only:   Pay the lower interest only portion of the monthly payment and a balloon payment at the end

Loan Term Options

Bridge loan terms typically range from 12 to 24 months providing ample time to sell your current luxury property. This is a big reason a solid exit strategy is required.

Transaction example of a Bridge Loan in California

1.)   Current Residence Details

  • Location: San Francisco, CA
  • Home Value: $2,800,000
  • Mortgage Balance: $800,000
  • Available Equity (60% LTV): $1,680,000

2.)   Target Property Details

  • Location: Palo Alto, CA
  • Purchase Price: $3,200,000

Bridge Loan Structure with Cross-Collateralization

To make the transaction possible, we will use cross-collateralization placing liens on both the San Francisco home and the Palo Alto property. Here’s how it worked:

  • Bridge Loan Amount: $2,500,000
  • Secured Against San Francisco Equity: $1,680,000 (max 60% LTV)
  • Secured Against Palo Alto Property: $820,000
  • Cash Contribution: $700,000 from personal savings

 

How Cross-Collateralization Helped

The cross-collateralization strategy enabled the homeowner to successfully:

  • Maximize Borrowing Power: Leveraging equity in both properties provided the necessary funds.
  • Make a Non-Contingent Offer: Their bid stood out as an all-cash equivalent in a competitive Palo Alto market.
  • Smooth Transition: The San Francisco home was sold after the purchase. This paid down the bridge loan balance and freed up equity.

Interested in learning how a bridge loan can work for you? Contact us today to explore financing options tailored to your needs.

mortgage originator shaking hand of high-net-worth borrower

Bridge Loan Application Process

Step-by-Step Process

  1. Pre-qualification: Initial assessment of your financial situation. Time: 1 day
  2. Document gathering: Proof of assets, income, and property details. Time: 1-2 days
  3. Loan approval: Underwriting, order appraisal(s) and final decision. Time: 5-10 days
  4. Closing: Finalizing of the loan, clear to close, and transferring funds. Time: 1-2 days

How to Apply for a Bridge Loan

The application process with a luxury bridge loan lender is streamlined compared to traditional mortgages often completing in 14-21 days. This speed is crucial when competing for prime properties in hot markets like Presidio Terrace in San Francisco or River Oaks in Houston.

Common Challenges in the Bridge Loan Process

Be prepared for potential hurdles such as:

Pros and Cons of Bridge Loans

Advantages

  • Quick access to funds for luxury property purchases
  • Able to make non-contingent offers which is more attractive in high-end markets
  • Flexibility to time your home sale optimally in the luxury segment
  • Less competition from buyers relying on traditional financing
  • Move once instead of selling your home & storing your belongings then having to move again once you buy another home

Disadvantages

  • Higher interest rates compared to traditional mortgages
  • Higher fees for higher risk
  • Short repayment period, which can be challenging in slower luxury markets
  • Potential for two high-value mortgage payments if your current home doesn't sell quickly

Best Bridge Loan Alternatives

If a luxury bridge loan doesn't align with your needs, consider these alternatives:

Bridge Loan Trends and Market Insights

The luxury bridge loan market is evolving:

 

By choosing us you have more options with our access to over 75 different wholesale lenders who offer non-QM loan programs.

Still have questions about this loan product?    Check these answers


Disclosure: Minimum loan amount is $1,000,000 for residential bridge loans. Loan guidelines are subject to change per lender at any time until the loan is approved and the rate is locked. Borrowers must be approved by underwriting. Not all applicants will qualify.