Most homeowners who want to relocate rely on the money they get after disposing of their existing home to fund a new one. But closing dates don’t always allow, and when that occurs, you can find yourself in a difficult financial balancing act.
A private bridge loan can assist you with funding to acquire a new house as you await finances from the sale of your existing home to buy the new house. However, there are shortcomings to this kind of arrangement.
What is a private bridge loan?
A private bridge loan refers to a short-term loan that you can use to acquire a new house in the real estate business when the buyer cannot raise enough finances to purchase the property without selling the existing home.
Benefits of private bridge loans
Private bridge loans have several, some of which are;
- The application process and closing of private bridge loans take less time than other traditional types of loans.
- A bridge loan can enable you to acquire the property you need at any time regardless of cash deficit. If you know that the property you intend to buy is in great demand, a viable option is to secure a bridge loan acquire it.
- If you sell your property, but a buyer is not forthcoming, and in dire need of cash, a bridge loan is a viable option. Typically, it will take several months to sell your existing property. In such instances, you can secure a bridge loan so that you can meet your financial needs before the sale.
- When you secure a bridge loan, private bridge lenders may not necessarily demand that you pay the loan in monthly installments. In most cases, they will expect repayment once the property has been sold. Thus, you do not need to worry much about the financial burden of making monthly installments.