Home Loans Versus Bridging Loans

Home Loans Versus Bridging Loans

Home loans and bridging loans are 2 different kinds of loans. Almost everyone of you know that what is a Home loan but many few people know that What it means by Bridging Loans? In this Article, I will teach you in Layman’s Language that what is Bridging Loan?

A Bridging Loan is a Loan taken out for a period of 2 weeks to 3 years pending the arrangement of long term financing (Home Loan).

In other words, As the name suggests, Bridging loans are for bridging the gap. Bridging loans are the intermediate financing loan for an Individual or Business until permanent or the next level of financing is obtained.

Money from the new financing is generally used to pay back the bridge loan. Now, Say For Example, If you have applied for the Home loan but the process is going to take 3 months because you have to fulfill some documents and that will take 3 months, Than you can take a Bridge Loan to finance your home.

This is because the seller sometimes can’t wait until you approved for a Home Loan. Thus, Bridging loan fulfills the gap between this period. Bridge Loans are usually used for Commercial real estate purchase. Bridge Loan rates as higher. They can be 12-15% per annum.

Real Estate Investors use the Bridge loans often to finance large property acquisitions.