Its not uncommon for a construction project to require some form of construction bridge loan. Remember that the definition of a bridge loan is that its for a certain amount and purpose and has a defined end point.
The purpose will be to provide a certain amount of incremental capital for the project and the end point will either be repayment by take out mortgage or property sales proceeds.[flashvideo file=http://jwredosept.s3.amazonaws.com/09.19.2012.construction.bridge.loan.1b-1.mp4 image=http://www.ontarioconstructionloans.ca/wp-content/uploads/2012/10/construction.bridge.loan_.jpg width=500 height=299 /]
There are basically five reasons why a construction bridge loan may be required:
In most cases, the bridge loan is being sought near the end of the project, so the majority of the building risk has already been covered off which will allow a private mortgage lender to provide a bridge loan against the property for potentially a higher value than the original construction loan, creating the ability to borrow additional capital.
If the equity position is too tight for the total bridge funds required, another real estate property can also be considered as secondary security.
Because these construction bridge loans tend to be much smaller in amount than the construction mortgage and the duration very short, they can be put into place in a matter of days in many cases.
If you have a construction project that is going sideways or quickly running out of cash, give me a call so that we can see what types of construction bridge loan options may be available to you.