Bridge Loan

 Available For A period Not Exceeding 12 Months.

 

Features Of Bridge Loan

  • Short term loan.
  • The loan is backed by collateral security.
  • The loan amount depends on the repayment capacity. The cost includes stamp duty charges, registration fees and transfer fee subject to a maximum of Rs.50 lakh or four times the gross annual income, whichever is less.
  • The borrower will have to repay the loan by paying equated monthly instalments or paying interest till the entire loan is repaid within 2 years.
  • The rate of interest depends on the loan amount and the capacity of the borrower to repay and the collateral that is being offered. The rate of interest also depends on the estimated sale price of your home.

How does Bridge Loan function in India?

The bridge loan can be structured in the following two ways:

  • You can either pay off the liens on your existing property, or  You can use second mortgage on top of the liens.
  • If you are paying off the liens on your existing property, then the remaining amount can be used to pay the down payment for your move-up house.
  • Instead of making monthly payments on the loan, you will be making mortgage payments on your new house.
  • If you are using second mortgage on top of the liens, you will be making mortgage payments for existing home as well as the move-up home.
  • When you are applying for a bridge loan, be cautious and ensure that you can pay off the loan in a year.
  • It is advisable that you finance your down payment with your own shares, other assets or stocks.