Ever been in a situation where you require cash urgently to close a real estate deal? This is where short-term financing comes into the equation. While most banks cannot offer quick financing resolutions, private lenders, particularly bridge loans lenders can.
Commercial bridge loans offer short-term financing to persons or business owners who need a temporary solution prior the approval of their conventional loan.
All About Commercial Bridge Loans
Commercial bridge loans are meant to be short-term, close to one year. Although it has a fast application and approval process, it can also involve very high-interest rates.
These kinds of loans are normally paid back after the borrower has secured a long-term loan or has sold an existing property.
In opposition to any conventional mortgage lending, commercial bridge loans are endorsed by non-financial assets.
If you intend to get a bridge loan to close a real estate deal, the property in question is used as the loan collateral, with the loan-to-value ratio going up to 65%
Situations In Which You Can Use Commercial Bridge Loans
1. Real Estate Investment
If you want to sell a commercial property and it is delaying another property you are eyeing, you can apply for this loan so that you can secure the new property while you are waiting to sell your old one.
2. Real Estate Development
When you are working on an imperative project, and you require fast cash to meet crucial deadlines, you can go to bridge loan lenders for help. Instead of putting your project on hold, you can get an emergency bridge loan to avoid disruptions and delays in your project.
3. Continuity of Real Estate Business
When a business partner opts to pursue other interests, the business can be at risk. In such a situation, you can make use of the present real estate assets to get a commercial bridge loan to protect the current purchase or finance before you get a long-term resolution.
Why Should You Consider A Bridge Loan For Your Commercial Real Estate Loans?
Invest In Other Commercial Properties
You can leverage your interim financing benefits of your bridge loans to make an investment in a new property; this will give you extra flexibility in a fast growing market.
Hence, commercial bridge loans help you do business normally with no compromise to your long-term ROI (return on investment)
More Information On Commercial Bridge Loans
The main use of commercial bridge loans is to offer quick cash before you qualify for a long-term financing. Nonetheless, there are some other reasons that might make you consider a bridge loan:
– When your credit profile requires some improvement
– The property has substandard residence rates.
– Partial ownership
Bridge loans usually have a repayment period of 6 months-3 years, after which the property in question is sold or refinanced with long-term financing.
Commercial Bridge loans are used for buying or refinancing hotels, retail properties, office buildings, and multifarious housing such as apartments and also for raw land to be formulated for commercial use.
Commercial bridge loans feature faster closings, and the amounts of loans are based on the entirely enhanced value of the property instead of its “as-is” value. Thus, it provides the cash that a real estate investor requires to close deals, complete essential renovations, sell or refinance into stable financing with reasonable payments per month.
With commercial bridge loans you have a Solid Financial Product:
– You are assured of a first position lien on properties
– You pay no commissions, asset charges or management fees.