Over the past few years, residential and Commercial Bridge Loans have gained immense popularity among both investors and owners and investors. A bridge loan, a short-term financing option, is the most advantageous choice for getting hands-on cash immediately.
Whether you are hustling for lenders or want to step into any private bank for approval of the loans to purchase and sell a new or old property, you need to be fully prepared for it. How are you going to do it? The list of questions is given below.
So, let’s begin….
What Is a Bridge Loan in Simple Terms?
A bridge loan is a short-term financing solution officially provided by a bridge loan lender and used to meet the gap between a sale and a purchase. If you have a property that has not been sold yet, the lender can hold that property as security and release the loan amount you can use to buy another property. This way, you can secure your present property and get the loans for other obligations.
What Is the Purpose of a Bridging Loan?
Whether you seek a commercial bridge loan or want to sell or purchase your home property, the bridging loan best fits that purpose. If your target is property development or buying property, then a bridging loan can be used for
- Fill the financial gaps
- Quick access to the funds
- Secure the desired property
- Initiate the necessary renovations without waiting for the existing property to be sold.
Are You Familiar with Your Market?
Before entering the lending process, get a hands-on grip on your market, whether real estate, inventory purchase, or whatever. For instance, if you are a real estate investor looking for a financing solution, research the market conditions before applying for a commercial bridge loan.
What Are the Interest Rates of the Bridge Loan?
The interest rates are variable. It all depends on the lender you choose for the quick bridge loan. So before going for a loan, always compare the different lenders, their offers, and their interest rates on different values. The factors that are responsible for interest rates amount are
- Type of lender
- Qualification of borrower
- Loan terms
- Loan amount and property value
How Do I Qualify for a Bridge Loan?
Every lender has a different set of requirements, which means if you ask three other lenders, you will probably land on the three distinct requirements. However, one common requirement will always be collateral. Unlike traditional loans, which demand a credit history, commercial bridge loans only demand collaterals because every person who will avail of the loan is either in the process of selling the property or going through the sales purchase phase. So, if you have a property on board, you stand in the row for the bridge loan.
How Long Does a Bridge Loan Typically Take to Close?
So many factors count in the closing process of a bridge loan, but one thing is that the closing of the bridge loan is faster than a traditional loan. For instance, if you want to buy a condominium, the loan processing time will be a few days, and if you plan to buy the whole commercial place, it can even land in the weeks for the approvals. But if you are fulfilling all the requirements and have a collateral worth of the loan amount, then a few days is enough to approve the bridge loan.
What are the repayment terms for the bridge loan?
This short-term payment structure has flexible repayment terms, such as not having to go all out to pay the loan back. The loan amount is fully paid once your property is labeled “Sold out.” That’s why the loan is known as short-term access to money. It is released on a property, and once the property is sold out, your loan will be repaid immediately.
What Is the Limit to the Size of the Bridge Loan They Can Offer?
The amount varies substantially from lender to lender. All you need to look for is a lender offering bridge loans that temporarily fulfill your cash flow requirements. The amount could be $125k, $250k, $500k or even higher. The factors that count are:
- LTV, The loan to value of the property
- LTC, The loan to cost of the property
- ARV, the after-repair value of the property
- The size of the loan
- The previous credit history
How does a Bridge Loan affect my Credit History?
Your credit history can improve or worsen depending on how long it takes you to repay the loan or whether you miss the committed date. But if you pay the loan on time and fulfill all the obligations, your credit score will improve with time.
What Are the Pros and Cons of a Bridge Loan?
A long list of benefits comes with a bridge loan, and so do drawbacks. The benefits you will get with the bridge loan you can
- seize the opportunities in a timely
- Out a contingency on contracts
- Get the cash for the down payment on the new property
- It gets approved within weeks, unlike traditional loans
The drawbacks that come with a bridge loan:
- The repayment is directly linked with the property sale, due, which you get stuck between two mortgages.
- Lenders can foreclose your property if you cannot repay the loan.
- Some lenders release loans at high interest rates.
Purple Tree Funding: A Reliable Choice among Many Bridge Lenders
Purple Tree Funding is the top-of-the-line commercial bridge loan provider, which allows you to get the loan with the easiest terms and quick approvals and releases. If you have any collateral, three months of bank statements, a driving license, and a voided check, then your loan will be just 24 hours away. Your loan amount will be released to your bank account as soon as the inspection and verification of the documents are completed.
Whatever your need is, whether $25ok or $500k, it will land directly in your accounts after approvals. There will be no long verification and no demand for hefty documents.
Still have queries? Call us and let your worries vanish into thin air.
