Finance Guide

A bridge loan is a short-term loan usually taken out to cover some immediate financing need. It is usually expected to tide the borrower over a period of temporary difficulty until some new source of funding becomes available. Interest rates on bridging loans are typically very high in comparison to more conventional loan types. This is because the risk associated with them is far greater. Indeed, many mainstream sources of borrowing will refuse to offer bridge loans, and would-be borrowers may be forced to look to non-standards lenders for support.

Scenarios in which bridge loans might be sought include a home-owner selling a home before moving into a new property. The deal for the purchase of the new property may have to be completed before the deal for the sale of the old one. This creates a temporary financial difficulty which can be overcome with the help of a bridge loan. Companies also seek bridge loans if some unexpected profit opportunity emerges and they are unable to raise enough finance right away to take advantage of it.

Bridge loans are usually of very short duration, a typical term being around 12 months, and the lenders may demand firm evidence of significant collateral before granting the funds requested.

In order to get any type of loan one needs a good credit score. If you want your credit report then there are many online websites which provides free credit report, they also teaches you how to improve credit score.

One Response to “What is Bridge Loan”

Leave a Reply

You must be logged in to post a comment.