Qualifying for a Commercial Mortgage Bridge Loan

Commercial bridge loans have come to common use nowadays. Considering its frequent use, it is time we discuss who qualifies to such loans. Though it differs for every lender, there are some general requirements to follow. Here are some.

  • The debt service coverage ratio is expected to be 1.10 to 1.25.
  • Some experience in succeeding in some minor projects that are similar is expected.
  • The credit score should be 650+.
  • The participant’s net worth must be equal to the loan amount that is requested.
  • Every other general financial documentation as in 2 years of tax returns, rent rolls and action plan inclusive, all of it must be submitted with the application.

Documentation Required

Personal (all borrowers and principals)

  • Credit report
  • Tax returns
  • Resume

Property & Project

  • Income and expense statements obtained from previous owner of the property.
  • Rent rolls
  • Schedule of leases
  • Executive summary of your project
  • Breakdown of renovation costs and project schedule
  • Exit strategy (sale, refi, etc.)

Post Submission – What To Do?

Once the documentation is all set from your end, the lender will be ordering an appraisal regarding the subject property. This appraisal might include an environmental study. Moreover, you can also expect the lender to request a broker’s letter of value regarding the property. This is usually issued by commercial real estate broker. The broker is expected to have a significant experience in dealing with the local real estate market, commercially. They might also order a survey of the property that is the centre piece including the title search and insurance.

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When Will You Need A Commercial Mortgage Bridge Loan?

Whenever you are looking to buy a commercial property that might possibly need renovation. Here, the term renovation means a substantial one not minor changes you might want to do. The renovation here is mandatory in order to get the property in a functional mode. In this case, you might need some capital amount for the renovation and the purchase that is related to the same. Commercial bridge loans play a vital role here helping you with your finances. Be it multifamily residence, a retail space, an office space or an entirely industry property, commercial mortgage loans can be availed according to the status of the recipient.

There will be no scope of jumping out of the budget or fraudulent activities here. It is important to have all the right documents with the right reasons why the place needs a renovation badly. Above all of it, one must have the action plan to prove the lender that you are moving in the right direction.

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