Bridge Loan

A bridge loan is short-term financing covering the gap between immediate capital needs and longer-term funding, typically 6-24 months with higher interest rates and balloon payment structures.


Loan CharacteristicsTerms
Duration6-24 months
Interest rate2-4% above standard mortgages
LTV60-70% maximum
Payment structureInterest-only with balloon
Common Use CasesApplication
Property acquisitionQuick purchase before permanent financing
Auction purchasesImmediate settlement required
Renovation fundingBefore refinance to long-term debt
Cross-border buyersAwaiting fund transfer or asset sale
Cost AnalysisExample AED 2M Bridge Loan
12-month term at 7%AED 140,000 interest
Arrangement fee 2%AED 40,000
Total costAED 180,000 (9% effective)
Exit requirementRefinance or property sale

Related Terms

Equity ReleaseBalloon PaymentBalloon PaymentShort-Term FinancingDeveloper FinancingMaturity Date

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