Bridge money can help businesses and individuals while they wait for the rest of their financing.
When most people think about taking out a loan to make a major purchase like buying a home, they think of the loans that people get from banks. These are the most common type of loan out there, so it’s not a surprise that this is where people’s heads go. However, there are many different types of loans available to consumers, and not all of them come from banks and other financial institutions. For example, there’s something known as a private money loan, which is a type of loan that borrowers get from a private entity like a business or an individual. If they’re turned down by their bank or if they just need to get their hands on money in a hurry, borrowers will turn to private money lending. They’ll take out what’s known as a hard money loan, where they get the money they need, but they have to pay it back faster and they have to pay a higher interest rate. This type of loan is particularly common in the real estate industry, and is used by businesses and individuals that make their money by flipping homes. They get their hard money home, buy a house, and then when they sell the house they pay back their loan with the interest that it’s accrued.
Another common type of loan that businesses and individuals take out is what’s known as bridge money. You can probably guess how this loan works from the name. A bridge money loan is a type of loan that a borrower will secure while they’re waiting on the rest of their financing to come through. For example, maybe they’ve taken out a loan from their bank to purchase a new office building for their business, but they’re waiting on the money to come through and they need to make the purchase as quickly as possible. They’ll turn to a private money lender and they’ll take out a bridge loan. This type of loan, much like a hard money loan, has a much shorter timeline in which it needs to be paid back, and it comes with a higher interest rate. Once the company’s financing comes through from the bank, they’ll use that money to pay back their bridge loan.
Bridge loans are great for house flippers as well because they need to get their money quickly so they can buy the home before they’re able to sell the home. However, banks and other lenders can take a long time to pass the money along to their borrower, so a bridge loan allows the house flipper to buy the house while they wait for the money to come through. The key to borrowing these types of loans is finding a great company to work with who you know you can trust. You need a company that’s going to be clear about their interest rates and how quickly the loan needs to be paid back. If you’re in need of bridge money and you’re looking for a quality lender to take the loan from, check out Montegra Capital Resources.