What Is A Bridge Loan

What Is A Bridge Loan



A bridge loan,​ which can also be called a​ hard money loan,​ is​ a​ short-term loan that is​ used until a​ person or​ company can secure permanent financing. Basically,​ they "bridge" the​ gap between today's need for immediate cash to​ pay bills and the​ final closing of​ a​ pending investment deal or​ long-term financing package.

Bridge loans are usually offered for terms of​ 12-36 months and many can be refinanced into low cost,​ long-term financing through a​ lender. Bridge loans are not only for shorter terms,​ but are also needed to​ close quickly,​ so the​ borrower can take advantage of​ the​ opportunity to​ arrange for a​ longer term loan when they are ready. Speed is​ also an​ important factor in​ financing a​ bridge loan because the​ borrower may be trying to​ restructure debt or​ avoid claming bankruptcy.

Some borrowers look for a​ bridge loan to​ span the​ gap between the​ two transactions of​ buying a​ new home and selling the​ old one. However,​ most bridge loans are used in​ purchasing or​ refinancing commercial real estate. There are mortgage bridge loans and commercial bridge loans for various income properties including; apartments,​ industrial buildings,​ retail,​ hotels,​ healthcare,​ and mixed use.


For more information on​ a​ bridge loan,​ visit Security National Capital.




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