Everything you need to Know about Bridge Loans : Characteristics


Bridge loans are designed to meet immediate money needs without going to a bank. Private bridge lenders help people’s dreams become a reality through an individually structured loan to meet individual needs.

However, private bridge loans are not a one-size-fits-all kind of loans. Like in most financial services, loans vary between lenders. But in all situations, private bridge lenders provide flexible loan structures, and these loans can be very beneficial to lenders.

Here are some characteristics of private bridge loans.

They are short term

Also known as hard money loans, bridge loans are short term. In short term, it means a loan doesn’t exceed a year. However, this one year is on the high side of this kind of business. The payment term is often no longer than 6-12 months of which you are expected to pay off the loan, fees, and interest immediately your original house sells.

The approval process is fast-tracked

Private lenders understand that borrowers in need of bridge loans need the money quickest possible. This means the process to process a loan will be much shorter than in other kinds of loans.

They are differently structured

Private bridge loans may be structured in various ways depending on the lender. The most used structure enables borrowers to settle their mortgages and use the balance for down payments plus closing costs and on a new home.

You can still use a bridge loan as a second mortgage and invest all the money in a new home.

They are backed by collateral

Since private bridge lenders lend money to meet immediate money needs to clients whose cash flow is insufficient, they require some collateral for security. For instance, for a builder seeking to obtain new land, the builder may offer existing land and its assets as collateral.

They are easier to acquire

Private bridge loans are easier to get than traditional banks. Banks put you through a tedious application process, but private bridge lenders get the business done quickly, and their clients can meet their cash needs in no time.

Less risk and more rewards

Bridge loans can be risky but really pay off. What’s more, they mutually benefit both the lender and borrower and cement a long term client-lender relationship.

While there are many ways of acquiring loans, private bridge loans are often the best option. They provide for an immediate financial need which can be very convenient.