Utilizing a Bridge Loan as an Asset
A Bridge Loan
can offer you financing for down to 60 to 75% for the value of this property as well as you typically receive an answer within two days – not a couple of months. A bridge loan is an asset based loan based solely on the home and property you plan to purchase or refinance. Your credit history has almost nothing to do with the use of a bridge loan, it’s mainly based with the collateral value of the properties at hand.
Banks as well as other traditional lenders, on one other hand, carefully assess an individual’s credit worthiness or his opportunity to repay the money. They consider the current income of the borrower and his credit score. This slows down the entire process and can last months at times. You could lose a very secure and cheap fixer upper opportunity to competition, and in turn waste all of the effort you put in to begin with.
An asset based loan is called a “non-recourse loan. In other words, it is a loan that has no recourse to you as the individual or your business entity.
Assets are a certainly something that is a resource that can be used as income. Whether it’s the selling off pieces of value, retirement accounts that build over time, stocks that pay dividends, or appreciating commodities like real estate, assets all represent a source of income in one way or another. The catch is that many assets need to be sold or liquidated in order to produce income, thus relieving you among the asset during the process.
An asset based loan like a bridge loan does not do this, it just takes a cut.