Traditional bank loans are designed for long-term financing, often spanning 15 to 30 years. While these loans work well for homeowners, they don’t always meet the needs of real estate investors looking for short-term financing solutions.
Two of the most common types of unconventional loans investors seek out are bridge loans and hard money loans. In this article, we’ll explain bridge vs. hard money loans to examine what the difference is between these two types of financing.
What is a Bridge Loan?
A bridge loan is a short-term financing option that helps real estate investors secure quick funding while waiting for long-term financing. These loans are often used to purchase, renovate, or reposition a property before securing a traditional mortgage or selling the asset.
Bridge loans are commonly used in:
- Fix-and-flip investments where investors need fast capital.
- Property acquisitions where timing is critical.
- Transition periods when refinancing takes longer than expected.
Bridge loans may come from traditional lenders or private lenders, but they typically have short repayment terms, averaging 6 to 12 months.
Speak with a hard money bridge lender today if you think applying for a bridge loan would meet your financial needs.
What is a Hard Money Loan?
Hard money loans are also known as private loans. When traditional bank loans do not approve investors, hard loans are a popular and effective alternative source of financing.
The most unique and distinguishable quality of hard money loans is that these loans are asset-based, meaning private lenders offer financing based on property value, not credit histories. In addition, since private lenders finance hard money loans, the process of getting approved and receiving cash flow from these loans is much more rapid than traditional bank loans and bridge loans.
If you think hard money loans are a viable financing option for your real estate investments, speak with a hard money lender to get started.
Key Characteristics
- Alternative to conventional bank loans
- Asset-based instead of credit-based
- Fast approval rates
Which Loan Is Right for You?
Both bridge loans and hard money loans can be valuable tools for real estate investors, but selecting the right one depends on your financial situation and investment goals.
Here at LJC Financial LLC, we offer some of the best financing and guidance for hard money and bridge loans. If you’re unsure which of these two financing options will fit best with your investment goals, speak with one of our representatives.
Our team of experts will help you feel confident about your financing plans. To learn more about our loans or our services, browse our website.