The results provided by this calculator are for information purposes only and do not constitute legal or financial advice.
A bridge loan is a short-term credit that lets you buy a new property before you have sold the old one. The bank advances part of the estimated value of the property being sold; this amount is repaid in one go as soon as the sale is completed.
The bank never lends 100% of the value of the property to sell. It applies a lending ratio, usually between 60% and 80%, to protect itself against a sale below the estimate. If any capital remains due on the previous loan, it is deducted from the bridge amount.
The formula is as follows:
Bridge loan amount = (value of the property to sell × ratio) − outstanding capital
With a partial deferment, the borrower pays the interest (and insurance) every month for the whole duration of the loan; only the capital is repaid at the sale. With a full deferment, the borrower only pays the insurance each month: the interest accumulates and is settled in one go, together with the capital, at the time of the sale.
Monthly interest = bridge loan amount × annual rate / 12
Interest due at the end = bridge loan amount × annual rate × duration in months / 12
For a property valued at €300,000 with a 70% ratio and outstanding capital of €50,000, the bridge loan amount is:
(300,000 × 70%) − 50,000 = €160,000
At a 4% rate with partial deferment, the monthly interest amounts to:
160,000 × 4% / 12 = €533.33 per month
With full deferment over 12 months, the interest due at the time of the sale would be 160,000 × 4% = €6,400, to be repaid on top of the €160,000 capital.
