A bridge loan (or bridging finance) is a short-term financing that is used to bridge a temporary financial gap. This type of credit is often used in real estate projects, for example when capital is needed for the purchase or renovation of a property, while the proceeds of the sale of another property are not yet available.
Features of a bridge loan:
- Short term: Usually with a term of 6 to 24 months.
- Flexibility: Often tailored to the specific timing and cash flow of a project.
- Targeted: Used for situations where rapid liquidity is required, for example in real estate trading, renovations or projects where a quick purchase and sale is sought.
Who is it for?
A bridge loan is mainly used by commercial real estate professionals, such as real estate investors, traders or developers, who have experience with real estate projects and can demonstrate a track record.