Bridge loans are related to short-term loans, which are intended to solve a special type of needs that traditional bank mortgages could not. Occasionally, a month’s delay can mean you miss out on a great opportunity. This average mortgage bureaucracy can be skipped if we opt for a bridge loan. In an easy and fast way, the real estate investor can access the amount he needs, and this will allow him to take advantage of the opportunity, avoiding wasting time due to procedures or deadlines.
The lack of funds does not necessarily mean that we have to miss out on great business opportunities, or the house you have always dreamed of. Perhaps there is simply a gap, a period in which you need to resolve some issues to gain liquidity. At that moment, an opportunity appears. What would you do? Would you let it go? Bridge loans can bridge this gap for you to bridge, to bridge that gap from one point to another. They can pay off your investments for a short period of time when you don’t have enough money in your account or if you’re waiting to close another delayed transaction. As if this were not enough, this type of mortgage offers many advantages over other types of financing. Next, let’s dive into each of them.
The 8 most important advantages of bridging loans
Bridge loans are not like any known type of mortgage, they offer more flexibility and customization according to the needs of the investor and taking into account the operation to be carried out.
- When an investor cannot access a mortgage for reasons of time, it is usual to immediately think of other financing options. Bridge loan rates are a little higher than mortgage rates but, at the same time, lower than personal loan rates or rates on other types of loans.
- Investors can choose between options with variable or fixed rates. Depending on the length of the bridge loan, if the payoff is short-term, a variable rate may be better. If it is a long-term bridge loan, we suggest choosing fixed rates.
- A bridging loan lender knows all about business investments and the real estate market. Therefore, the loan can be personalized and approved faster, in accordance with the investors’ strategic business plans. For example, the investor could pay off the loan with another property, with income from other businesses, or refinance the loan with a traditional mortgage.
- Bridge loans can be canceled at any time, in advance of maturity, without any commission or penalty.
- It can be granted for bridging loans, the possibility of making monthly interest payments (small payments), and canceling the initial amount when the loan matures.
- Bridging loans may be backed by other assets, rather than tied to credit score or employment income.
- This type of mortgage loan is an excellent option for foreign investors, when there is no possible way to obtain funds or apply to local banks in Miami.
- Bridge loans are usually granted for periods of one to three years, with the possibility of renewal. It is an excellent option if investors do not have exact dates of other related businesses in progress.
Bridge loans offer the last advantages that we have mentioned, and some others. If you want to calculate different possibilities you can try our loan calculator.
Bridge loans are the most convenient loans for foreign investors in real estate in Miami. The customization of terms, rates and cancellation are the best option when applying for a loan in the Florida area.