This is typically a private mortgage due to the fact that most bridge loans need to be put into place quickly and many times a private mortgage lender is the only type of lender that can work within the timelines you have available.
The purpose for property bridge loans primarily will be for property acquisition or some other purpose where capital is required right away.
With respect to property acquisition or purchase, especially when it comes to commercial property, many times the seller will not be prepared to provide the time necessary for you to arrange commercial mortgage financing through a bank so a property bridge loan is required to close the deal and provide you with enough time to get the long term financing you prefer in place.
Without the property bridge loan, you may not be able to close the deal in the time you have to work with and the repayment of the bridge is through the long term financing that will be arranged in the coming months.
So like any bridge loan, there is a defined beginning and end to the transaction, which makes it easier to get financing is place as a private lender can easily assess market value and qualify the borrower’s exit plan for repayment.
While real estate purchases tend to be the main sources for bridge financing, there are many many other situations where bridge loans are arranged where the loan is still secured by a property mortgage.
These other financing requirements can include work being done on the property as well as completely unrelated capital needs.
For instance, its not uncommon for a small business owner to leverage their equity in real estate to provide a short term capital injection into their business to acquire inventory for a sale or provide the capital necessary to complete some sort of transaction.
A real estate mortgage is the common source of financing for the bridge loan due to the ability to get the funding in place in the least amount of time compared to an equipment refinancing, or purchase order financing, or contract financing of some sort where substantial due diligence may need to be performed by the lender before being comfortable with the risk associated with the bridge loan request.
Most property bridge loans through private lenders fall within a capital requirement of $50,000 to $2,000,000 as individual private lenders do not tend go outside of this range.
If you have a property bridge loan requirement, I suggest that you give me a call so we can discuss your situation together and review potential bridge financing options that may be available to you.