What is typically a feature of a bridge loan?

A bridge loan is commonly characterized as a form of short-term financing specifically designed to facilitate real estate transactions. These loans are typically used to "bridge the gap" between a need for immediate capital and the time it might take to secure permanent financing or to sell a property. They allow borrowers to leverage the equity in their existing property to fund a new purchase before the old property has been sold.

This type of loan generally comes into play in scenarios where quick access to funds is necessary, such as purchasing a new home before selling the current one. The short-term nature of bridge loans, which often extends from a few months to a year, aligns well with situations requiring immediate financial solutions, making them a practical choice for transitional periods in real estate transactions.

The focus on short-term use distinguishes bridge loans from other forms of real estate financing, which might be structured for longer repayment periods. Therefore, the feature of being short-term financing is an essential aspect that accurately defines bridge loans.