The Basics of Bridge Loans
Are you looking for a way to secure your next commercial real estate and make the necessary renovations necessary for a profitable location? Whether you need to purchase your real estate or simply need to update it to attract new renters, find out how bridge loans can give you the short-term financing you need to propel your investment forward.
Purchase and improve your real estate with a bridge loan. This type of loan is best used to purchase properties that are in need of repair. If you aren’t able to receive a conventional loan or your chosen real estate isn’t eligible for a conventional mortgage, use a bridge loan to purchase the property.
Of course, because bridge loans are short-term in nature, you’ll need a quick solution to either pay off your loan or refinance. The most popular option is to refinance. Once you’ve used your bridge loan to purchase a property and hire professional contractors to make needed repairs or renovations, your property should have enough added value to qualify for a conventional loan. Refinance to receive a longer term and a lower interest rate.
In order to receive these excellent loans, you’ll need to offer security. Typically, your bridge loan is secured by the property you’ve purchased. Because you also need to hire contractors to repair or remodel the property, you’ll need to offer other security as well. Either another property or business equipment is usually used to give you enough leverage to take out a bridge loan.
The length of a bridge loan depends largely on the amount, the security and your application. Some need to be repaid in just a few months while others have a term of a few years. Either way, you’ll need a prompt exit strategy to make sure you’re ready to repay your loan.
Either way, expect to pay more in interest than typical bank loans. Because of the additional risk and flexible nature of a bridge loan, you shouldn’t keep your loan for too long. Short-term loans with high interest rates may cost slightly more, but long-term loans with high interest rates can be a huge disadvantage.
Discover how you can implement your real estate strategy with the help of a bridge loan. These dynamic loans are perfect for securing your commercial real estate and adding value to your property in order to refinance. Find out today if you’re qualified for bridge loans for your next investment.