Where Can I Get a Bridge Loan?
A bridge loan is a short-term loan that provides financing during a period of transition. Homeowners typically use a bridge loan toward the cost of buying a new home without first having to sell their current residence. Businesses use bridge loans to help maintain operations during a temporary revenue crunch. Lenders of all sorts, from traditional lenders to alternative lenders, offer bridge loans.
Many traditional lenders such as banks and credit unions offer bridge loans, although they usually do so only for existing customers. You may be able to obtain a bridge loan from a conventional lender if you’re not already a customer, but the terms almost certainly will not be as favorable. Traditional lenders prefer to focus on their bread and butter business of making longer-term conventional and refi mortgages. Businesses seeking a bridge loan may be able to turn to the Small Business Administration.
Online lenders are the main source of bridge loans. They compete with one another on the basis of the fees they charge and the length of the approval process. Online lenders operate with lower overhead and lower credit requirements than traditional lenders. However, they may charge higher interest rates to offset the risks they assume by lending to businesses and individuals who, because they are now paying on two loans, may be more likely to default on payments.
A bridge loan used to purchase a primary residence can receive approval and funding very quickly from an online lender specializing in bridge loans, compared with a conventional lender, which may take 30 to 45 days for approval and funding. Many lenders of bridge loans offer same-day approvals for loan requests.
There are a few different ways you can get a bridge loan. Talk to a financial advisor to decide how which method is best for your needs.