What is a bridge loan?
Bridge The loan is a form of short -term financing, which extends the loan to the debtor for a short period of time, usually with a very high interest rate. As the name suggests, the bridge loan bridges the gap between more permanent methods of financing; These loans are sometimes used in the real estate industry, risk capitalists and some investors. This type of loan is not available in all banks because it tends to be more risky than the possibilities of a long -term loan. For example, a real estate speculator could get a bridge loan to buy a piece of property offered at an extremely good price, with the intention of obtaining a loan with better conditions later. Bridge loans are also used to create various other shortcomings of temporary financing. Someone could also use a bridge loan for something like buying a used car, with the intention of repaying the loan in a few months.
The length of the bridge loan varies greatly;Some are as short as two weeks, while others last up to three years. The debtor must usually offer something like a real estate or a business inventory as a bridge loan and can also pay a high fee for loan for the top of interest and other fees that can be associated with a loan.
Bridge funding can be risky for the rental bank because the creditor may not always be able to repay the loan. It usually offers only larger banks that can afford a delinquency or banks that gambles on high -risk investments. For debtors, these loans are a double sword, especially when the debtor does not take time to review the loan conditions; For example, trees can be very expensive, very fast. This problem is especially common with new debtors; When considering any loan, it is always a good idea to read a small print.
You can also hear a bridge loan referred to as a swing loan or financing a swing. People who are such a financialOffered, they may want to carefully consider the offer and find out whether they have other funds to raise the necessary funds. For example, a home capital loan can be supplied with a lower interest rate.