Getting a loan to purchase real estate can be a significant undertaking. This is especially true if you don’t have a lot of cash immediately available for a down payment. Fortunately, there is an option that can help to speed things up: bridge funding. This can be a powerful financial tool for residential buyers, businesses purchasing owner-occupied properties and investors.

What Is a Bridge Loan?

A bridge loan is a type of short-term financing intended to fill the gap between your current financial position and where you need to be to secure a long-term loan. Typically, it is used to make a down payment on a real estate loan before selling an existing property. This is helpful for businesses that need to plan careful moves to avoid interrupting operations. It is also helpful for people who want to move quickly on a real estate purchase.

Sometimes, bridge loans are used as short-term loans to cover the full financing needs for a property. This may be the case for a business that has significant capital and income but that doesn’t have enough cash on hand to cover the cost of the property right away.

When Is the Right Time To Use Bridge Financing?

There are lots of situations that can benefit from using a bridge loan. In general, it is used as an accelerant for a real estate deal. If you want to make sure that you can jump on a real estate opportunity or need to make changes to your business real estate portfolio.

Typically, bridge loans have high interest and short terms. So, it is in the interest of the borrower to pay them off quickly. Therefore, many borrowers use them when they are expecting some sort of large income event such as the sale of another property.

Bridge financing can be used for purchasing, renovating or covering other costs. However, it is most commonly associated with real estate purchases/

What Are the Benefits of Bridge Loans?

Bridge loans can help you in many ways. Whether you are in a tight financial situation or just want to move quickly, bridge financing can be helpful. These are some advantages:

  • Easy to qualify for
  • Fast-moving
  • Highly flexible
  • Path to securing long-term financing

Learn More

Discover more about bridge funding today. This could be a helpful tool for your commercial real estate aspirations. The more you understand bridge loans, the better equipped you will be to use them.