Bridge Loan Calculator

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Inputs

Current Property Price

$

Mortgage Owed

$

New Property Price

$

Bridge Loan Term

Months

Bridge Loan Interest Rate

%

Down Payment

$

Results

Bridge Loan Breakdown

Balloon Payment	$400,000
Interest-Only Payments	$40,000
Closing Costs	$12,000

New Mortgage Breakdown

Current Mortgage Balance	$300,000
Bridge Loan Balance	$400,000
Property Sale Proceedings	$400,000
New Mortgage Balance	$300,000

Loan-to-Value Ratio	60%
Is PMI Needed?	No

About This Bridge Loan Calculator

This calculator allows you to estimate the cost of your bridge loan as well as the new mortgage on a house you will need to take. This bridging loan calculator requires only six inputs to estimate all the results. The following sections explain the inputs and the results of the calculator.

Inputs:

• Current Property Price: The price of the existing property you are selling.
• New Property Price: The price of the property you are planning to buy.
• Mortgage Owed: The mortgage principal outstanding on your current home. If your current house is fully paid off, you can put $0 to indicate that there is no outstanding principal.
• Bridge Loan Interest Rate: The interest rate charged on your bridge loan. Generally, bridge loans have a variable interest rate that is 2% over the prime rate.
• Bridge Loan Term: The number of months you are planning to pay off the bridge loan. The usual bridge loan term is 12 months.
• Down Payment: The down payment you are planning to contribute to the bridge loan. Most private lenders require at least a 20% down payment for bridge financing.

Results:

The results section is broken down into two groups: Bridge Loan Breakdown and New Mortgage Breakdown. The Bridge Loan Breakdown has information about the Bridge Loan including the balloon payment required at the time of loan expiration, interest-only payments, and closing costs. The New Mortgage Breakdown shows you how your new mortgage principal is calculated as well as provides you with information about the loan-to-value (LTV) ratio and whether you are required to pay private mortgage insurance.

Bridge Loan Breakdown

• Balloon Payment: The amount required to be paid in the last month of the bridge loan term. This payment equals the bridge loan principal because the bridge loan is not amortized during the term.
• Interest-Only Payments: The total amount you will have to pay in interest during the bridge loan lifetime. To see how much you have to pay monthly, simply divide the total interest-only payments by the number of months of the bridge loan term.
• Closing Costs: Every loan has some closing costs. The closing costs on a bridge loan are around 3% of the principal amount, so you should allocate the money towards it. Please note that closing costs may vary from 2% to 5%, and it largely depends on the bridge loan lender.

New Mortgage Breakdown

• Current Mortgage Balance: The outstanding principal on your current mortgage used for the house you are selling.
• Bridge Loan Balance: The mortgage principal of your bridge loan. It is equal to the price of the new property minus the down payment you are contributing.
• Property Sale Proceedings: The amount of money you expect to receive from the sale of your property. This result does not include potential closing costs paid by the seller.
• New Mortgage Balance: The approximate balance of your new mortgage on the property you are getting after you sell your current property.
• Loan-to-Value Ratio: The ratio of your mortgage balance to the value of your property. This ratio is used to see whether you need to pay private mortgage insurance or you can avoid it.
• Is PMI Needed: This value shows you whether you need private mortgage insurance or not. It assumes that you are getting a conventional mortgage. If you get an FHA loan, USDA loan, or VA loan, you may have to pay for mortgage insurance.

How Do Bridge Loans Work?

A bridge loan is a hard money type of loan, which means that it is a short-term financing option that is secured by real estate. This type of loan is usually easy and quick to get because the lenders issuing the loan look at the collateral rather than the creditworthiness of a borrower. This means that the lenders may not require an extensive credit score check.

Hard money loans are offered by private lenders and they tend to be riskier than other mortgages. This means that it usually has a higher interest rate that leads to a higher overall cost of the loan. It is important to note that a lot of bridge loans have interest-only payments that are charged on the loan amount with a balloon payment at the end of the bridge loan term. This means that the monthly payments are quite low since the borrower does not amortize the loan. You can also check a hard money loan calculator if you are looking for another type of hard money loan.

Hard money loans are usually offered for 12 to 48 months with a balloon payment at the end of the term. A lender expects a borrower to sell their current property during the life of the loan and pay off the loan in full once their property is sold with a balloon payment. If the borrower cannot cover the balloon payment when it is due, the lender may foreclose on the borrower’s property and sell it to recoup the losses.