Residential Bridging Loans

Bridging loans are very common. They are the short term loans where you have to return the loan as soon as possible. The interest rate is also very high and this type of loan is only taken when there is an emergency. You can really point out advantages as well as disadvantages. However if you want it for shorter period of time then there is no harm in taking it.

I have seen many real estate investors who go for bridge loans when they are wiling to flipping some house. However common man also goes for bridge loans. There might be the case that your house might not be in good condition and you might be in double mind. Suppose you want to sell your house. Since the condition of your house is not good you might not be able to sell it for more. However you can always repair your house and then sell it for higher rate. However you might not have the money too. What can you do now? The answer and in fact the solution is bridge loans. These are short term loans as I have stated earlier. You must however be confused that why it is called short term course? I will answer this question.

The interest rate of bridge loan is so high that only a fool will take it for long time. Can you really believe that the interest rate as far as bridge loans are concerned is about 9%? This is really high. Suppose you take $10000 loan. Then you will be required to pay an interest of $900 per month. You can easily understand that this is really a big ask and you will really fell in trouble. However you need not worry because you can keep the worry in any corner of your house by just paying back the amount within two to three months.

Now the question arises that what will you do with the loan amount. The answer is simple and straight forward and that is, the money will be used for repairing the house. Once you have repaired you house you will then try to sell it in the market for higher price. And I assure you that you will succeed. The newer looking house will lure the buyer to pay more and buy it anyhow.

This is a cat mouse game. You took the bridge loans, repaired the house and then sell it at higher price. You can now easily pay back the amount which you took as a bridge loan. Hence we see that bridge loan is advantageous in this case. And why not, the borrower uses his mind and make sure that he pays back the bridge amount as soon as possible so that he does not suffer from higher interest rate.