This is a loan for a short period of time on different collateral other than the subject.  The bridge loan can be a loan taken out on one property currently for sale to use as a down payment on another purchase.When the original property is sold the bridge loan is paid off. Bridge loans can also be used to complete some task on the property such as improvement of the property.Typically, the term of the loan is short-6 months to 1 year. Many of these loans do have options to extend for certain short periods of time. Most bridge loans do not have prepayment penalties.In all cases, the loan must be paid off or replaced with permanent financing within a short specified period of time.
Bridge loans are often used to renovate commercial buildings before permanent financing is applied for to present a fully leased building and therefore, more cash flow, value and a much stronger loan scenario.

Bridge loans are available from opportunity funds, pension plans, Reits and private investors.Hard money bridge loans are based on the equity in the property.

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