A bridge loan, also known as a swing loan, gap financing, or interim financing, is a loan type that provides prompt cash flow for your personal and business needs. It bridges the financial gap between your current situations by providing the finances you need while you don’t have them available. If you’re considering pursuing one, you must know how they work. Keep reading for more insights on bridge loans.
Do You Qualify for a Bridge Loan?
Lenders check if the borrowers meet their set criteria, which may vary from one lender to another. Typically, most lenders assess your credit score and worthiness, debt-to-income ratio, and other credentials. However, if you want to buy a home, the lender will look at your home equity before approving your bridge loan application. Once the lender defines you’re an ideal bridge loan candidate, you enjoy prompt approval than in traditional loans.
Advantages of Taking a Bridge Loan
All-inclusively, the fundamental advantage of a bridge loan is its flexibility. Further, it’s a short-term financing option. If you meet the lender’s minimum requirements, you can access the funds at any time, wherever. For example, you can use an interim loan to buy a new home before you sell the current one. The funding gives you peace of mind since you don’t have to accumulate vast money for your mortgage purchases.
Bridge loans are also best for small and medium-sized businesses facing financial problems. For example, business owners can venture and focus on various operations with a bridge loan even if they have no significant income source to fund the ventures. With this, they grab every opportunity that comes their way and maximize their revenue generation.
Disadvantages of a Bridge Loan
It’s good to know the bridge loans’ flipside. Although bridge loans provide financial support during the transition, they have high transactional costs and interest rates. Also, they’re risky if the proposed mortgage pricing falls when selling your home.
Bridge loans are an excellent way to access money while you await permanent financing availability. And, while you’re at it, don’t worry about where to get the funds. At Artis Commercial Capital, we deliver as per your personal and business needs. Reach us today, and you’ll be happy you did.