Bridge Loan Calculator

What is a Bridge Loan?

A bridge loan is a short-term financing option used to “bridge the gap” between two longer-term loans or financing sources. It provides temporary cash flow when you need money quickly before securing permanent financing or removing an existing obligation.

Bridge loans are popular when buying a new home before selling the current one. The bridge loan covers the down payment and closing costs on the new home until the existing home is sold and those funds become available.

Why Use a Bridge Loan Calculator?

Deciding if a bridge loan makes sense for your situation can be tricky. That’s where our free online bridge loan calculator comes in handy. It helps estimate the total costs and interest involved with taking out a bridge loan.

By inputting a few key details, the calculator shows you exactly how much a bridge loan would cost over the short term. This allows you to evaluate if the convenience of a bridge loan is worth the additional expense compared to other options.

How to Use Bridge Loan Calculator

To use the calculator, you’ll enter information about two loans:

Bridge Loan on Departure Property

• Current Market Value ($)
• Loan to Value (%)
• Outstanding Mortgage ($)
• Closing Costs ($)

New Property Purchase Loan

1. Purchase Price ($)
2. Cash from Liquid Assets Used for Down Payment ($)
3. Enter the amount you need to borrow for the bridge loan

1. Input following details details about both the property
2. Hit the “Calculate” button

The calculator will then display:

• The total interest you’ll pay over the bridge loan period
• The total cost of the bridge loan including interest and fees
• Your required monthly payments while the loan is outstanding

You can keep adjusting the loan amount, interest rate, and term to see how it impacts the overall bridge loan costs.

By including details about both the property you’re leaving and the new one you’re purchasing, the calculator can estimate:

• The total bridge loan amount required
• Interest and fees for the bridge loan period
• Your total costs over the short term

Bridge Loan Calculator Features

Our free online bridge loan calculator has several powerful features to estimate the true costs of taking out a bridge loan for your situation:

• Clean user interface makes entering details easy
• Calculates interest costs based on simple interest
• Option to include upfront fees and closing costs
• Automatically computes required monthly payments
• Gives total cost of bridge loan with a single click
• Download results as PDF, XLSX, XLS, CSV or TXT files
• No software installation or accounts needed

When to Use a Bridge Loan

A bridge loan can be a valuable tool in certain situations, such as:

• Buying a new home before selling the existing one – Covers downpayment and closing costs until the sale of your current home finalizes
• Renovating and flipping houses – Provides short-term cash to buy, renovate and sell properties quickly
• Unexpected costs during a business acquisition – Bridges the financing gap when acquiring a new business
• Cover commercial property downpayments and fees – For investors purchasing commercial real estate properties

Pros and Cons of Bridge Loans

Like any financial product, bridge loans have potential advantages and disadvantages:

Pros of Bridge Loans:

• Provides fast access to cash when needed most
• Buys time until longer-term financing is secured
• Prevents missing out on time-sensitive opportunities
• Interest-only monthly payments keep costs lower

Cons of Bridge Loans:

• Higher interest rates than conventional loans
• Additional fees and closing costs involved
• Extensive credit and income requirements
• Risk of owing two mortgage payments if timeline delays occur

Alternative Bridge Loan Options

While handy in some scenarios, bridge loans do come with higher costs. Some potential alternatives include:

• Personal loans or lines of credit
• Borrowing from 401(k), IRA or other retirement accounts
• Getting a home equity loan or HELOC against current home
• Asking the home seller for extended occupancy after closing
• Withdrawing a chunk of cash from securities/investment accounts

Before taking out a bridge loan, review all your options and run the numbers using our free calculator.

With these comprehensive calculations, you can accurately evaluate if taking out a bridge loan makes financial sense compared to alternatives like a home equity loan, personal loan, or simply saving more cash.

Run the numbers using our free tool to analyze your unique situation before making any decisions. We’ve made understanding the true cost of bridge loans easy!