Bridge loans are a form of financing that are offered by banks and companies to their clients and businesses. It is always the case that as a homeowner, when you are looking forward to the purchase of a new home while still in the process of disposing of the old one, there will be a crisis for the need of money for the need to buy the new one. 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. For those looking forward to making a new home purchase, the bridge loans can be of great help for them to make the required deposit for the purchase. When it comes to the times when you will be interested in finding alternative financing alternatives, as a homeowner or borrower you will have basically two alternative financing alternatives and these are-home equity loans and the bridge loans. Let us see some of the facts about the two alternatives for financing.
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.
As such you will be able to deal with the loans balance over just a period of some months being spread over that period as opposed to the case as it is with the home equity loans where you would have to deal with the same over such a period as long as 20 years in some cases. Bear in mind the fact that when it comes to loans, the longer and more extended the loan repayment period and schedule, the higher the chances and risk of defaulting at some point in time and as such the risks of losing your property pledged as collateral. 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.