Bridge Loan Glossary

Points (Mortgage)

Mortgage points are upfront fees paid to a lender at closing, where one point equals one percent of the total loan amount. Points are a form of prepaid interest or origination cost. On California bridge loans, points are the primary upfront cost alongside any other closing fees.

How Points Work on a Bridge Loan

One point = 1% of the loan amount. On a $400,000 bridge loan, one point equals $4,000. Two points equal $8,000. Points are paid at closing and are not rolled into the monthly payment.

North Coast Financial charges 1.25 to 1.95 points on California bridge loans. The exact amount depends on the loan size, loan-to-value ratio, and property characteristics. Points are disclosed upfront and do not change after the rate lock.

Points on a $700,000 Bridge Loan

At 1.5 points: 0.015 x $700,000 = $10,500 paid at closing. This is in addition to the monthly interest payments and any other closing costs. Because there is no prepayment penalty, paying the loan off after two months still only costs the points paid at closing plus two months of interest.

Points vs. Interest Rate

Points are a one-time upfront cost. The interest rate is the ongoing cost of borrowing, paid monthly. Both affect the total cost of a bridge loan, but which one matters more depends on how long you hold the loan. For a bridge loan paid off in 90 days, the points represent a larger portion of total cost than the interest. For a loan held for 9 months, the monthly interest payments accumulate more significantly.

Are Bridge Loan Points Tax Deductible?

Tax treatment of bridge loan points depends on how the property is used and how the loan is structured. Consult a tax advisor for guidance specific to your situation. This is not tax advice.

Frequently Asked Questions

North Coast Financial charges 1.25 to 1.95 points on California bridge loans. The specific amount depends on the loan size, LTV, and property type.
Points on bridge loans are paid at closing. They are not rolled into the loan balance or added to monthly payments. They are an upfront cost paid on the day the loan funds.
Compare both the points charged and the interest rate together. A lender with lower points but a higher rate may cost more over a 6-month term than a lender with slightly higher points and a lower rate. Calculate total cost based on your expected payoff timeline.