Whether you are a real estate investor or a home buyer, you can benefit from the flexibility of a bridge loan. Unlike other loans that come with a book of restrictions and conditions, bridge loans allow borrowers to virtually tailor, and make their own terms. If you’ve been looking for a traditional loan, stop for a moment and consider a more flexible bridge loan. Here are five reasons why:
1. Quick Approval
After you apply for a traditional loan, you can wait for days to find out whether you’re approved, and then for weeks before your funds are available. Bridge loans can be accessed much quicker than monies from other loans. In fact, you can have access to the money that you have borrowed in as little as 24 hours under special circumstances. If you don’t qualify for these special circumstances, you can still expect to receive your funds within two weeks.
2. Poor Credit is Okay
While the majority of loans require that you have an above-average credit score to qualify, bridge loans look at other factors, making your credit score less of a concern. Instead of looking at your personal credit, particularly if you’re an investor, lenders look closely at your proposed project. If your project stands a good chance of being successful, you’re likely to receive the loan, regardless of your poor credit history.
3. Early Repayment Options
Providing that you tell your lender that you plan to repay your loan early if you are able to, you won’t be hit hard by early repayment penalties. Because lenders lose out on the money they make from interest if you repay your loan early, they often attach hefty fees to early repayments to dissuade borrowers from paying off their loan before it matures.
4. Easy Interest Payments
With traditional loans, your interest payment is wrapped up in your monthly payment. With a bridge loan, you can roll your interest payments over, opting to pay your interest in one lump sum rather than in small, monthly payments. This can be useful for those who are using a bridge loan to purchase a new house while waiting to sell their current home. It can also be useful to investors who will be using a more permanent type of financing in the future.
5. Few Usage Restrictions
Most traditional loans have stipulations that spell out what borrowers may do with their funds. Bridge loans, unlike these traditional loans, have very few restrictions. Many people turn to bridge loans when they are turned down for a traditional loan because the lender doesn’t approve of their plans for the borrowed funds. If you want more options when it comes to using your funds, a bridge loan may be your best option.
If you haven’t considered a bridge loan as part of your financing package, the flexibility this type of loan offers should not only make you consider it, but it should move it straight to the top of your list of options. With quick approval, few usage restrictions, and early repayment options, bridge loans are the best option for the majority of borrowers.
Benjamin Vazquez is a freelance blogger who writes about the pros and cons of different types of loans, including bridge loans and Net Loans.
Image Source: Robert Huffstutter