A bridge loan is a loan used for a short period of time while a person or company secures long term financing. They are typically used when a buyer needs cash immediately and does not have time to go through the traditional loan process. They usually have higher interest than a traditional loan and are backed by the property that is being purchased. The are used as a short term loan to get a buyer from one place in the buying process to another more stable place, hence the term “bridge.”
Types of Bridge Loans
Commercial bridge loans are a great solution for a number of financing needs. We can provide flexible arrangements that are needed for a short term loan to help bridge the gap when one loan ends. They can also be used when a business owner is unable to secure permanent financing, but has a potential project that needs financing.
Commercial bridge loans KC Investor Funding are great for investors because they are quick and easy. We know that securing long term financing can take a while and sometimes require multiple revisions, so while that’s being completed, we can make sure your deal doesn’t fall through. These loans can be for just a few months or up to a year, just depends on your situation and what is needed for your own financial needs.
Now although residential bridge loans aren’t as common, they do exist and can be used if a buyer is in the process of buying one property and selling another. Sometimes the process of selling a property can take a while and if you don’t want to risk losing a potential home, a bridge loan can be useful in the residential sector. The buyer usually needs to have very good credit and a low debt to income ratio when using a bridge loan for a residential purchase. This allows the lender to secure both mortgages into one and offer a percentage of that total amount in the form of a loan. This means the buyer will need to have some form of equity or savings available to secure the loan.
The Finer Details
The reason bridge loans are popular in the commercial industry is because they have a quick turnaround process. This convenience does come with a cost of a higher interest rate or fees that may not be found with a traditional loan but quick cash can be very profitable long term for a commercial purchase especially if it’s one that is highly desirable. Most business owners know they will be able to pay the loan back quickly so the interest rate isn’t too much of a concern and they can avoid repayment penalties as well.
Contact Us Today
Whether you need some fast cash to cover a gap in residential financing or just want to strike while the iron is hot on a one of a kind investment opportunity, we can help you secure those funds with a short term bridge loan. Reach out to KC Investor Funding in Kansas and Missouri today!