Are you caught in a financial mess and desperately in search of a quick fix to bridge the gap between your transactions? Well, bridge financing might be the solution you are looking for!

What’s Bridge Financing?

You may also find people calling it bridge loans or bridge funding. It is basically a short-term mortgage option that provides you with an immediate cash influx you need on the side. At the same time, you work tirelessly on securing a more permanent solution.

Bridge Financing – Key Points to Remember

Bridge financing is very common in the world of real estate, where time is of the essence when it comes to securing money.

  1. The Purpose:
    The main purpose of bridge financing is to acquire short-term financial requirements. Bridge financing is no less than a lifeline for buyers who are in search of a new property to purchase before selling their existing one. They can secure their dream home with ease.
  2. Duration:
    Typically, bridge loans are short-term. Their length ranges from a few weeks to a max time of 2 years. The specificity of duration depends on the negotiated terms between you, the borrower, and the lender. The best part here is that it provides you with the flexibility to meet your immediate financial needs.
  3. Higher Interest Rates:
    You must note that bridge loans usually come along with higher interest rates compared to traditional loans. However, consider this a fair trade-off since you are equipped with instant money. Lenders understand that the loan will be paid off relatively quickly. Moreover, bridge loan financing typically follows an interest-only structure, resulting in lower monthly payments than expected.
  4. Collateral Damage:
    Lenders do need some sort of surety, and to protect their investment, bridge loans are collateralized against the property you currently own. This exchange is a means of assurance for the lender that they have in case of default. The collateral requirement is basically a layer of security for both parties involved in this exchange.
  5. Speed and Flexibility of Loan:
    What makes bridge financing stand out from the crowd in the world of financial matters? It is its urgent sanction – speedy access to capital. The application, along with the approval process, is usually simple compared to traditional loans. This, in turn, helps you to attack opportunities quickly and grab them as an early bird.
  6. Exit Strategy:
    You must devise a clear exit strategy before applying for bridge loans. This strategy is an explanation of how you plan to pay back the loan within the agreed timeline. It may involve anything like selling a property or securing long-term financing. You must provide a solid plan for repayment to establish trust and confidence with the lender.

Closing Note

You can always get in touch with professionals from Reddoor Funding to provide you with accurate information about loan programs and funds for your flip-and-fix project. Connect with us by dialing (832) 539-1099.

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