Note Rate: What Your Monthly Payment Is Based On
The note rate, also called the contract rate or stated rate, is the percentage used to calculate the interest you are charged each month. On North Coast Financial bridge loans, the monthly payment is based on a 30-year amortization, so it also includes some principal, and the remaining balance is due at the end of the term.
The note rate does not change over the loan term for fixed-rate bridge loans. It is the number quoted in your loan term sheet and referenced in the promissory note you sign at closing.
APR: The Full Picture of Borrowing Cost
APR adds certain lender fees, including origination fees and points, to the interest rate and spreads them across the loan term to produce a single annualized percentage. APR is higher than the note rate whenever the loan has points or other prepaid finance charges.
APR is calculated assuming you hold the loan for its full term. On a bridge loan paid off in 90 days, the effective cost is very different from the APR, which is calculated over the full term (up to 11 months). Upfront costs like points have a larger impact on short payoff scenarios than the APR calculation reflects for a full term.
How to Evaluate Bridge Loan Cost Accurately
Rather than relying on APR alone, calculate your total cost based on your expected payoff timeline. Add the origination fee (points) to the total interest you expect to pay for the number of months you hold the loan. Because North Coast Financial bridge loans have no prepayment penalties, early payoff reduces your total interest cost with no additional charge.
For example: $600,000 loan, 1.5 points, paid off in 3 months, with monthly interest of about $5,225. Origination fee: $9,000. Interest: $5,225 x 3 months = $15,675. Points plus interest: $24,675, plus any third-party closing costs. No further penalty on payoff.
