Bridging the Gap with a Bridge Loan

For those who have not heard of a bridge loan, a bridge loan is also known as residential bridge loans or bridge loan financing in California.  For many years, real estate investors and home owners in California have been provided with commercial and residential bridge loans financing respectively. Californians can choose from the many bridge loan lenders providing fast approvals and funding, and enjoy competitive rates and reliable services.

What is a bridge loan? It is an interim financing for individuals or developers until a more permanent financing is approved or obtained. A bridge loan is more expensive and has a higher interest rate than the conventional financing to compensate for the additional risk. Bridge loans are typically provided by the California bridge loan lenders with relatively little documentation. A bridge loan is usually obtained before a long term financing is secure.

Commercial real estate purchasers usually obtained the bridge loans to quickly secure a property or to retrieve real estate from foreclosure. The loan is usually paid back when the property is sold or refinanced. Sometimes, it will have to wait untill the borrower’s finance improves or the property is completed. The bridge loan comes in useful when the borrowers or individual faces insufficient cash issue or unusual situations.

A bridge loan is usually obtained by developers while waiting for their project’s permit to be approved. In this case the loan is usually charged at a high interest rate because there is no guarantee that the project will materialize. But once the project permit is approved, the developers will be entitled to apply for larger loans from the traditional sources such as banks with a lower interest rates for longer period. Once the bank loan is approved, the bridge loan will be paid off and the rest of the money will be used to fund the project until its completion.

In the case of a Californian who wishes to secure a loan from a residential bridge loan lender California, to make a down payment for a new house while waiting for the current house to be sold. After the current house has been sold, the money from the sale is used to pay off the loan. 

Bridge loans are available to the following properties:

·         Residential

·         Owner occupied or investment

·         Single-family, multi-family, apartment buildings

·         Commercial

·         Industrial

The rates of bridge loan may vary from lender to lender. Borrowers opted for bridge loans even though the rates may be higher than traditional lender due to the minimal lending requirement and faster funding than the traditional financers.

Disclosure:  This is a contributed post.