In the ever-evolving real estate world, the process of buying and selling properties can often be intricate and pose considerable challenges even for the most successful property investors and homeowners.
Whether you’re a seasoned investor looking to expand your property portfolio or a homeowner ready to move from one property to another, understanding how bridge financing works can be the key to seizing new opportunities swiftly and ensuring seamless property transitions. If you’re ready to bridge the gap between your real estate property transactions, our comprehensive guide will equip you with all the necessary knowledge.
Bridge Loan Application Process with HCS Equity
HCS Equity is a trusted, private bridge loan lender in California, specializing in commercial and residential bridge loans that help investors bridge the gap between property transactions. Like with every other financing option, property owners in California need to understand the loan application process and eligibility requirements.
Unlike traditional banks, where creditworthiness and financial stability are the key factors in the loan approval process, bridge loans from private firms are primarily based on the available property equity. Borrowers need to show they have sufficient capital to make a 35% or greater down payment, or that they own an existing property (or properties) that can be used as collateral/security for a private loan).
The documentation required for our bridge loans is fairly limited, and based primarily on the equity in the property and/or income from each property rather than the borrower’s personal financial history. This means that borrowers typically don’t need to provide financial statements or proof of income as they would for a traditional loan.
Bridge Loan Approval and Terms
Private bridge lenders such as HCS Equity have a unique approval process and tailored loan terms. Understanding the process is essential for navigating this financial tool effectively and making informed decisions.
Private money lenders such as HCS Equity determine the bridge loan amount primarily based on several factors, with the current property value and the loan-to-value (LTV) ratio being our key considerations. We may conduct a property appraisal to determine its value. Most property owners can borrow up to 65% of their current property’s equity.
Due to their short-term nature, speed, and flexibility, bridge loans often come with higher interest rates compared to what you’d find with traditional bank financing. However, HCS Equity offers competitive rates that meet the borrower’s financial needs.
HCS Equity bridge loans typically have shorter terms, often ranging from 6 months to 1 year, depending on the specific scenario. Even though we typically expect a bridge loan to be paid back within this term, borrowers do have an option of extending the loan term (fees and rate adjustments may apply) in case they encounter any unexpected delays. This would provide them additional time to sell a property or secure permanent financing.
Collateral and Security
HCS Equity bridge loans are secured against an asset, usually, the properties currently listed for sale or in escrow. Even though the bridge loan amount is based on the current property value and the maximum LTV ratio (65%), we’re also willing to cross-collateralize multiple properties if needed to complete the purchase.
Moreover, our bridge loans are not only applicable to specific property types, they can be used for a wide range of property types, including single-family homes, mixed-use, commercial, and apartment buildings.
Disbursement of Funds and Timing
One of the most significant benefits of HCS Equity bridge loans is the timely access to funds. Borrowers can usually access funds within 7 business days. Having readily available funds ensures they can secure their new property at the right moment and avoid any delays.
Many property investors know that not having the necessary funds on hand when they need them can potentially jeopardize an investment deal. Luckily, HCS Equity bridge loans are designed to facilitate smooth transitions between properties and maximize investment opportunities across various property sectors.
Contact HCS Equity today to discuss how bridge financing works and how it can help you achieve your real estate goals.