Bridge loans provide property owners the opportunity to take advantage of the equity in their existing piece of property so that they can acquire another piece of property. This type of loan is usually short-term in nature and can be used to finance industrial, commercial, or residential estates. Here are some of the benefits of obtaining a bridge loan.
Consists of a Short Application Process
The application process associated with a bridge loan is much shorter than the one associated with a conventional bank loan. Since bridge loan lenders are mainly interested in the equity of a prospective borrower’s property, they are not going to take that much time inspecting the borrower’s credit and employment histories when considering him or her for a loan. This makes the process of applying for a bridge loan run quickly, smoothly, and efficiently; if no issues with the borrower’s home equity arise, he or she should be able to get approved and receive funding within a few days.
Makes Moving to a New Home Easier
Bridge loans make relocating easy for borrowers, giving them the opportunity to move into their new home right after moving out of their existing one. Typically, those who do not get bridge loans have to, after selling and leaving their current residence, find a place to stay temporarily, be it an apartment or hotel; staying somewhere for a short period of time can be a hassle for many since they have to move their belongings multiple times or pay money to place them in a unit at a self-storage facility. By getting a bridge loan, borrowers can forgo temporary housing and use the funds to make a down payment on their new home.
Does Not Require Long-Term Commitment
A bridge loan is designed to be paid off within one year; this in contrast to traditional bank loans, which are often designed to be paid off within several years. Borrowers are well aware that they are supposed to utilize the money they receive after the sale of their existing home to pay off their bridge loan. Thus, they should only have to wait a few weeks to a few months to settle the sale of their current abode before being financially able to pay back their loan.
A bridge loan can make purchasing and moving into a new home relatively convenient. It is a great option for those with less-than-perfect credit or who are experiencing income instability.