What Is A Bridge Loan?

Milton Ferrara December 5, 2017 Comments Off on What Is A Bridge Loan?
What Is A Bridge Loan?

Bridge loans are similar to hard money loans.  California real estate investors and developers are usually the target audience for these types of loans.  Bridge loans lenders California exclusively serve clients who already own real estate.  The borrowers usually use these loans to help fund short-term real estate projects.

Why Choose Bridge Loans?

Bridge loans have a fairly short term of repayment. It does not usually exceed three years, but some bridge loans require repayment in as little as two weeks.  A bridge loan must also be secured by collateral, in the form of a real estate property you already own.  If you secure the loan with a residential real estate property, you can usually borrow up to 80 percent of the value of the property.  If your collateral is a commercial real estate property, the limit you can borrow is usually two thirds of the value of the property.  Therefore, bridge loans are not for everyone.  Most people take out bridge loans in one of the following circumstances:

  • You are a real estate investor and need to close on the sale of a property you are buying.
  • You need to stop the bank from foreclosing on a property you own.
  • You want to buy a property that will not be available for long.  If you wait to get a different kind of loan, you will lose the opportunity to buy the property.

Bridge Loans vs. Hard Money Loans

Bridge loans and hard money loans have more things in common than they do differences.  Both types of loans are available in similar amounts, and they both require real estate as collateral.  Bridge loans tend to have even shorter terms of repayment than hard money loans.

When you need to act quickly in the real estate industry, bridge loans are a good source of funding.

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