Bridge loans are a form of financing that are offered by banks and companies to their clients and businesses. In most cases when homeowners are in the process of buying a new home while selling the one they have, they will be in need of money to fend for this need. There are a number of the other reasons that send homeowners and individuals to go for the bridging loans such as the case where they use them to settle some expenses such as divorce expenses, estate taxes and as well some use them to help save their key investments from foreclosure. If you are in for the purchase of a new home, then the bridge loans will as well be of great help to your needs to have your down payment made towards the closing of the transfer. In the event that you are looking for such monies, as a borrower you can choose to go for the home equity loans or the bridge loans. Take a look at some of the facts behind these two ideal financing alternatives at hand for you as a borrower.
One of the attractive facts about the home equity loans is that of the comparatively lower interest rates. However, with this said and done, you need to be alive to the fact that with the house as the collateral in these loans, in the event of default you stand at such a high risk of losing your home. With the bridge loans as well, the home you have will still be the security or asset that you will attach for you to be advanced the loan. Nevertheless it is a beneficial kind of loan looking at the fact that it is a short term loan often whose term limits do not go beyond 3 years.
This is so beneficial in the sense that as a borrower, the burden of servicing your outstanding loan balances will be spread over a period of some few months and then you will be done and dry with the loan as opposed to the case as is with the home equity loans where you would otherwise have to spread the loan balance over such a long period of time, say something going to over 20 years. Remember the fact that when it comes to loans, the longer the repayment period, the higher the risk that at some point in time they may get to default and the risks of losing your pledged collateral happen to be as apparent. Bridge loans are even further a benefit for the fact that the borrower can actually choose a repayment plan, pay the loan earlier and besides this there are no repayment penalties levied.