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The Differences between Hard Money Loans and Bridge Loans

By April 11, 2022June 23rd, 2023Blog, Hard Money Loans
Hard money loans

At times, even those in the financial space confuse hard money loans and bridge loans because they are so similar in nature. That said, they are not the same type of financing. The differences are subtle, but they are important enough to take note of. Let’s take a look at some of their distinctions:

Hard Money Loan

A hard money loan is secured by the value of the real estate that is purchased or remodeled with its use. It is not unlike a home mortgage, in theory, however, hard money loans are typically used to purchase commercial property rather than private homes.

The loan is also funded by private lenders rather than through a bank or another financial institution, such as a credit union. While mortgages are sought daily to buy commercial property, a hard money loan is seen as a viable alternative to this conventional financing.

Bridge Loan

A bridge loan, or a cash bridge loan, as they are commonly called, is used mostly to fill a gap, by providing a proverbial “bridge,” in financing. Many times, it is emergency funding for purchasing investment properties or to rehabilitate real estate in decline. It is also secured with the property in question as collateral.

Bridge loans are usually offered as hard money loans from private lenders, but that is not always the case. Unlike hard money loans in general, they are often provided by conventional lenders, such as large banking conglomerates. And, since these loans are property-secured, the banks usually will not conduct a credit check on the borrower.

What Are the Similarities?

As stated above, both hard money loans and bridge loans are secured with property used as collateral. And, as such, both types of financing can be obtained with quick turn-around time.

Each also possess flexible repayment terms which may be structured to accommodate both the lender’s interests and the borrower’s circumstances. There are usually no pre-payment penalties, and interest-only payments are allowed until the last balloon payment comes due.

Both options are short term loans, rather than long-term mortgages that can last over 30 years. This makes each a great option for use in flipping a property and reselling it at a later time.

In conclusion, bridge loans and hard money loans have a lot in common, but the terms are certainly not interchangeable. Thus, learning the differences can help you make the right decision when it comes to your borrowing needs.

To Learn More About How Hard Money Lenders in Los Angeles Can Help Fund Your Next Project Contact PB Financial Group Today

If you are interested in purchasing real estate or need funding for your next project, you need to work with a reputable and respected hard money lender in Los Angeles. PB Financial Group is a premier direct hard money, private money, and bridge lender, who has been providing quick funding since 2006 and have funded over 2700 hard money/private money loans.Our objective is to work to satisfy your financing needs on important real estate projects throughout California in an efficient and effective manner.

To learn more about how to successfully finance your next real estate venture, please contact PB Financial Group, at 877.700.3707 to schedule a consultation or visit to learn more.

PB Financial NMLS #357614/DRE #01522495

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