Clearing the Fog about Commercial Bridging Loans
We have been talking about loans for ages, and we think it’s time to debunk some of the myths that have been circulating real estate loans –specifically commercial bridge loans. This is because some newbies in this field can get confused regarding what is fact and what is a myth. So, if you are a newbie or want to clear some common misconceptions about bridging loans, then this blog will be a worthwhile read for you.
Misconceptions Vs. Facts –What’s the Truth?
Misconception: Bridging Loans Are Only for Desperate Borrowers
Fact: While bridging loans are often associated with urgent financial needs, they serve a broader purpose rather than desperation. Regarding real estate (especially commercial), the loans are flexible and used for diverse purposes like buying property, renovations, and refinancing.
But, these loans are specially used for grabbing opportunities on time-sensitive capital.
2. Misconception: Bridging Loans Are Extremely Expensive
Fact: While it’s true that bridging commercial loans typically have higher interest rates than other loans, they are not always expensive. The usual cost of bridging loans often comes from a misunderstanding of their short-term and risky nature. When you look at these loans in a context, the cost of a bridging loan becomes more reasonable, especially considering the speed, flexibility, and potential returns they offer.
Apart from this, some lenders like us also offer tailored lending terms to fulfill borrowers’ requirements. So, even if it’s a bit expensive, it is still pretty useful for your commercial projects.
3. Misconception: Bridging Loans Are Risky and Unregulated
Fact: Contrary to popular belief, bridging loans are subject to regulatory oversight and stick to industry standards and practices. Lenders who are responsible and ensure that their works are legal make it their mission to follow guidelines so that they can protect themselves and their borrower’s investments. When approached sensibly, bridging loans can be a safe and reliable financing solution for commercial projects.
4. Misconception: Bridging Loans Are Only for Large-Scale Projects
Fact: While bridging loans are often related with high-value transactions and large-scale projects, they are also suitable for smaller projects and individual investors. Whether it’s purchasing a commercial property, funding renovations, or paying off debts, bridging loans offer scalability and accessibility across a wide platform of commercial needs.
5. Misconception: Bridging Loans Are Only for Short-Term Solutions
Fact: While bridging loans are commonly used for short-term financing needs, they can also serve as valuable tools for longer-term investments. Some borrowers leverage them from their commercial bridging loan lenders as temporary financing solutions while securing permanent financing or waiting for a property to appreciate in value.
Apart from this, many lenders also offer flexible repayment options with a customizable plan so that borrowers don’t feel burdened by the loan. This way, borrowers can also use the money for their investments as they want.
Bridging loans can be both long-term and short-term –depending on the borrower’s needs.
Conclusion
Debunking these five myths must have helped you in understanding how bridging loans work in a better way. It doesn’t matter if you are new in this field or are an old player; it’s always good to learn what is true and what is not.
