Are you wondering about what your options are for commercial mortgages? The good news is that you aren’t limited—you’ll come to discover the terminology of hard money loans and bridge loans while delving into the financing choices available to you. Both have become increasingly popular as borrowers have sought other, non-traditional sources of financing as hard money loans and bridge loans from private lenders offer more freedom in flexibility, better options for loan structuring, more relaxed qualifications for approval, and even more advantages.
All About Bridge Loan Commercial Mortgages
A bridge loan, at its core, is a loan-anticipation loan—meaning, it’s a short-term loan that is typically made while waiting for more long-term or permanent funding. Therefore, bridge loans are used to leverage the equity between your current home as you wait for it to sell and bridging the purchase of your new home.
Bridge loans are provided by a variety of different types of lenders like banks, but private lenders can also fund them, too. By seeking out a bridge loan through a private lender, you can gain certain advantages like fast response time, higher loan amounts, and you may not even need a minimum credit score to qualify—unlike a bank. Bridge loans through private lenders still offer the same security and legality as a bank would, so you would not have to worry about vulnerability or risk when dealing with private lenders.
Commercial mortgages are reliant on efficiency in order for borrowers to secure the property they are looking to invest in, and with a bridge loan, this is entirely possible. Competition can be cut out with bridge loans from hard money lenders because of the swift response times, whereas in traditional means, banks will take weeks to approve a loan. By then, another interested party already scoops the property up.
Bridge loans open the door for more opportunities, too, by improving commercial cash flow. With fewer constrictions on funds, commercial mortgages are easier to obtain, and real estate isn’t as big as of an obstacle as it would be by other means of financing. These short-term loans can be a strategic approach to commercial mortgages, allowing buyers to avoid a few months of payments before committing to the loan policy payment start date.
Hard money loans allow borrowers to obtain loans without having to go to traditional commercial mortgage lenders. A hard money loan is sourced by an investor or an individual—a private money lender—who will use the property in question as collateral. Standard lenders will take their time issuing loans, checking credit scores, and ensuring that borrowers meet the various qualifications like minimum credit scores, income, and credit histories to see their ability to repay the loan. With a hard money loan, the process is expedited, and for many private money lenders, there are fewer approvals to surpass when issuing loans.
Hard money lenders are less concerned about your ability to repay because they will secure your physical collateral, like your commercial property, and resell it. For hard money lenders, the value of the commercial real estate is more critical than the borrower’s financial position. Once a relationship with a hard money lender has been established, acquiring hard money loans can be obtained in an even more timely fashion.
Both hard money loans and bridge loan financing are short-term loans. They are quick and easier to obtain than a traditional bank loan, which allows for greater possibilities in the commercial industry. Terms for both types of loans can be tailored to the borrower’s individual needs and unique commercial mortgage situation.
Contact Gelt Financial today for your bridge loan and hard money loan needs!