Check if a Bridge Loan is Right For You
Bridge loan helps real-estate or homebuyers take a loan against their current home in order to make the down payment on their new home. A bridge loan may be a good option for you if you want to purchase a new home before your current home has sold. This form of financing may also be helpful to businesses that need to cover operating expenses while awaiting long-term funding. When used for real estate , a bridge loan requires a borrower to pledge their current home or other assets as collateral to secure the debt — plus, the borrower must have at least 20% equity in that home. Bridge loans also tend to have high interest rates and only last for between six months and a year, so they’re best for borrowers who expect their current home to sell quickly. What Is a Bridge Loan? A bridge loan is a short-term loan used until a person or company secures permanent financing or removes an existing obligation. It allows the user to meet current obligations by providing immediate cash flow.