A bridge loan is a short-term financing option that serves as a temporary solution to meet immediate cash flow needs. Typically used in real estate transactions, it helps individuals or businesses secure funds quickly while awaiting more permanent financing arrangements or the sale of an existing asset.
Bridge loans are characterized by their flexible terms and quicker approval processes compared to traditional loans. They often have higher interest rates due to the short duration and increased risk associated with the loan. Borrowers commonly use bridge loans when purchasing a new property before selling their current one, ensuring they have the necessary funds to complete the transaction without delay.
In summary, a bridge loan provides crucial financial support for short-term needs, facilitating transactions and helping to bridge gaps in financing. This makes them highly relevant for real estate investors and homeowners seeking to navigate transitional periods effectively.
