Got some property in mind that you want to buy? Maybe you’re looking into moving into a new home, or maybe you’re looking forward to expanding your business. No matter what the case, you’re ready to expand your property – and fast.
The problem with that is you don’t have the money you need to make it happen. Buying the property you need isn’t a cheap process, and maybe you knew you couldn’t do it all on your own finances, but you’re going to need some extra help.
So what are you going to do? Ask for assistance from friends and family? Maybe sell off some property that you already own?
How about doing neither of those things?
You could get the house or the building you want without groveling at someone’s feet or selling your own stuff. All you need is to apply for a bridge loan.
What is a bridge loan, you ask? That’s a very good question – and luckily for you, we’ve got the answers. Keep reading to find out more.
So What Is a Bridge Loan, Exactly?
Bridge loans may sound confusing at first but they really aren’t very hard to understand. Once you do, you realize they’re the perfect thing for your financial needs.
As funny as it sounds, a bridge loan isn’t something you use to build a bridge, nor is it tied to bridges in any way. A bridge loan is a short-term loan that you can take out in order to buy a piece of property.
The difference between a bridge loan and a traditional loan is that traditional loans look at your credit score and your salary, while bridge loans are given based on the current property you already own.
To be more specific, the amount you may potentially receive is taken against your current property, and this determines just how much you will get when you get your loan statement.
But How Does a Bridge Loan Work? I Need Answers!
Alright, calm down. We’re getting there.
Bridge loans can work for both residential and commercial real estate buys, and in much the same manner. The entire idea is that the loan is essentially a “bridge” that helps you move from your old estate to your new one.
When you want to move into a new property but haven’t yet sold your old one, you can use a bridge loan to pay for the remainder of your mortgage.
This is a big help when you need to move to another place quickly, and you don’t have time to hand over the old estate to someone else.
Why Would I Need to Hurry? There’s Always Someone Looking to Buy!
That’s a negative, ghost rider.
There have been plenty of times when you just can’t sell off your old place before the move to the new one. Sometimes it may be your fault, and sometimes it may be the buyers.
For example, you may not have done a good job with advertising your property – if you advertised at all – and no one knows you’re trying to sell.
Maybe buyers don’t want the area because it won’t help their business grow (that’s why you left, after all). Or maybe the market is just too competitive and your old spot just doesn’t rank high on the list.
In any case, you don’t want to go to a new place and keep paying for an old one that you aren’t even using, unless the thought of paying for two locations sounds appealing to you. That’s why these loans are so helpful.
Okay, Okay, I’m Interested…Tell Me More!
As we’ve discussed so far, bridge loans are primarily to help you to pay off your old property. That being said, it doesn’t mean you can’t use it to help pay for other important property matter.
For example, let’s say that you borrowed a bridge loan against your old estate and it gave you $150,000 dollars. The first thing you’ll want to do is use the funds to pay off what you still owe for the old building.
If you still owe, say, $135,000 on the old place, plus around $5,000 in closing costs, you’ll have to pay off a grand total of $140,000. You’ll take the $150,000 you got from your bridge loan and use that to pay the fees you have.
Hold on a Second…
“But, wait!” you say. “You drew $150,000 in loans, but the actual cost to pay off the rest of the old building was $140,000. That means you still have $10,000 left over!”
Why yes. Yes, we do.
The $10,000 is yours to do whatever you want with. However, the smart business owner would use the funds to build up their new estate. After all, someone has to pay for it.
Your leftover money can be used to make a nice payment on the monthly estate bill. It could also be used to pay for any necessary equipment that your business needs to buy in order to continue to level up.
In short, getting a bridge loan is the very thing that could help you to grow your company and get you moving on the right track to building your business – and there’s absolutely nothing confusing about that at all.
Interesting in applying for a bridge loan now? Good choice. You should try checking out this page to get the bridge loan you need to turn your dreams into reality.
May your property-buying dreams become a success.
Get Your Business News When You Need It
Now that you know what is a bridge loan, you’ll be sure to apply to one at your earliest convenience. Why not learn about other ways that you can make your business grow?
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