Bridge financing gives loan recipients the option to secure a temporary loan before a more permanent one is finalized. Bridge financing is a popular way to finance a mortgage, and although the timeframe for repayment is much shorter, it provides more time for families who are transitioning into new homes. Bridge financing has many benefits, and it is good to know some of them in order to determine if this type of loan might be right for you.
Short Term In Nature
Because the loan is short term in nature, you don’t have to worry about keeping up with payments over a long period of time when circumstances change. This saves the borrower from compounding interest rates as well as other penalties for late payments.
Credit Ratings
If the borrower repays the loan within the stipulated timeframe, this can boost the borrower’s credit score, making them eligible for loans that may not have otherwise qualified for.
Time
Borrowers do not have to move into a new home as quickly with a bridge loan. They can use the value of their existing home to finance the bridge loan and postpone the date on which they are supposed to move. Moving into a new home can be hectic, and a bridge loan can buy you a few more days to get things organized. Since bridge loans can also be secured for businesses, it provides more time for businesses to carry out operations without any major interruption.
Flexibility In Repayment
Provided that you have the funds (and for bridge loans you are usually expected to) you have some options on how you can repay the loan. For example, you can take advantage of interest reserves if the property qualifies for a certain amount. Furthermore, there is no penalty for early repayment of the loan (unlike with other types of loans).
Customization
Bridge loans can be tailored to qualify for a variety of needs. There are various types of loans for individuals and businesses.
Bridge financing is a viable option for those who are in a strong financial position or have the means to repay a loan quickly. If time is of the essence then a bridge loan is a great solution. Also, if you would like to stay in your home a little longer before you move out, or you are not ready to find a new home, bridge financing can be a solution. At Northwood Mortgage, we find a tailored solution for our clients’ needs. Come in for a free consultation to see if bridge financing is right for you.
