A bridge loan is often used as a short-term financing solution to get the borrower from point A to B. In the market of commercial real estate in Ponte Vedra; a bridge loan can help finance the purchase or renovation of a property until permanent financing is arranged.
These loans are different from traditional loans due to their short-term contract and their higher cost. This means they should only be used where sales proceeds or permanent financing are guaranteed in the future. Some examples of when a bridge loan could be applicable include:
- Residential real estate sales
- Commercial real estate sales
- Larger business orders
The Pros and Cons of a Bridge Loan
Bridge loans allow a buyer access to a deal they may not have been financially able to support at that time. It also allows the buyer to close the sale much quicker than usual. There is also no pre-payment penalty, so if they can be paid off early, there will be no consequence and doing so is often viewed as a positive act.
These loans are incredibly expensive and are a great risk for buyers with no clear plan on permanent payment. If you need assistance determining if a bridge loan is right for your needs, contact our real estate attorneys at Baron Bartlett, P.A. today.