In a word “Yes”. A cash bridge loan is a short-term loan that is typically used to fill a gap in financing, often for property rehabilitation or investment-purpose properties.

A hard money land loan is a privately funded loan that is secured solely by the real estate asset’s value. It is often sought out as an alternative to conventional mortgage financing. To a large extent, these two terms are interchangeable.

Bridge Loans vs. Hard Money Loans: The Similarities

Property-secured: Both can be based solely on the value of the property being loaned against without taking the borrower’s credit under consideration. This also means that they can usually be obtained with quick turnaround time.

Short-term: Both are typically short-term, or temporary, loans as opposed to long-term mortgages. This makes them ideal for rehabilitation projects or other situations in which a borrower plans to resell or refinance a property in the near future.

Flexible repayment terms: Both can usually be structured to fit the borrower’s circumstances while still satisfying the lender. They also do not typically have any pre-payment penalties and often will allow the borrower to make interest-only payments until the bulk of the loan comes due. The cost of this flexibility is that both also have higher interest rates than conventional loans.

Bridge Loans vs. Hard Money Loans: The Differences

While hard money loans are always made by private lenders, conventional lenders will sometimes offer bridge loans, so while most bridge loans are also hard money loans, this is not always the case. Always ask your banker first if their institution can look at your bridge loan request. The bank interest rates are much lower than hard money loans. However, as suggested in other articles throughout this blog, having established contact with a hard money lender before you need them can be very useful for your investment tool bag.

To sum up, while there is a lot of overlap between bridge loans and hard money loans, they are not completely interchangeable terms. The main differences boil down to who makes the loan (private or institutional lender) and how the funds can be spent.

Call Montegra, a private lender in Denver,  at 303-377-4181 to help with your bridge loan needs.