Purchasing a new home before you can sell off the old one can be financially challenging. This is largely due to the need for cash for the new property when you cannot have access the equity on your existing home. This is where a bridge loan is especially important.
What is a Bridge Loan?
A bridge loan is a short term gap financing arrangement or assistance which is used to eliminate an existing financial obligation or secure permanent financing. With the availability of cash flow, bridge loans allows individuals meet their current financial obligations. But how soon can you secure a bridge loan? How long does it take to get one to meet your financial obligations?
Securing a Bridge Loan
Recent reports have shown that the average bridge loan financing term is now getting longer. According to one such report by Bridging Trends, while bridge loans are short term financing options, the average bridge loan now lasts a period of 12 months. This is not out of place as bridging finance is sold as ‘up to 12 months’. So the longer terms for securing loans are an indication that lenders are now leveraging the maximum terms for the average bridge loan.
However, it is important to note that the completion times for bridge loans can vary greatly, depending on the lender involved. But as this financing option continues to increase in popularity, more lenders are going into the business, and this means more competition among lenders. While this should be good news for potential borrowers, the uncertainty of the property market is a major problem for homeowners who wish to secure a hard money lenders san diego.
Some properties are more difficult to sell off, and a major requirement of a bridge loan is to lend against a property with a realistic sale potential. Sincelenders require substantial time to ensure this, this has led some to extend bridge loan completion times. A lender will likely take some time to consider individual circumstances and adjust their criteria depending on the needs of the borrower. That means borrowers with a good credit history and large deposit will enjoy favorable considerations from lenders.
How long does it take to secure a bridge loan? This depends on a number of factors: the lender, the sale potential of the property, and the credit history of the potential borrower. Despite the risks involved in seeking a bridge loan, it is a convenient financing option and can give you a good edge in competitive housing markets.