When you are contemplating purchasing a new property, whether it is a residential, a commercial, or an investment property, you are probably researching several different types of financing options. If you already have enough funds available for the purchase, and you don’t have any existing properties that you have to worry about liquidating to get the funds, then the financing will go relatively smooth. However, if you are planning on selling a property to get the equity before or after purchasing a new property, then things can get complicated if you are not prepared.
A commonly used financing option is a bridge loan. A bridge loan, commonly referred to as a swing loan, is a relatively short-term financing option for new purchases. Basically, a Bridge Loan helps finance a new purchase by providing money to help "bridge" the time gap before a previous property sells, and permanent financing can be obtained for the new purchase. Bridge loans are paid off when the existing property is sold.
Bridge loans can be used for a variety of real estate transactions, from residential properties to commercial properties. Bridge Loans are commonly used to acquire new properties, cash out on current equity, buy-out, purchase a foreclosure, and for new construction. Generally, to obtain a bridge loan on any new purchase, you must have a contract to sell on your existing property. If not, then a bridge loan may not be the most appropriate financing option for your needs. Bridge Loans let you purchase property almost immediately, without having to wait for another property to sell. They give you the needed time for your current property to sell, while still allowing you to purchase the new property almost immediately. If your property is taking longer to sell than originally planned, a bridge loan is there to help close the gap to allow you to make a new purchase without having to lose the chance. A bridge loan can be useful if you are relocating, and trying to handle selling your home when you still need to buy another immediately.
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