Types of Apartment Loan Terms

When you’re ready to invest in an apartment building, there are several options for financing. The type of loan you choose depends on how experienced you are and the specifics of your property.

Government-backed apartment loans are typically non-recourse. They allow borrowers to qualify with a lower credit profile and may 아파트담보대출 provide higher leverage than bank loans.

Short-Term Loans

As the name implies, short-term loans are repaid over a shorter period of time than other types of loans. Typically, borrowers apply online and provide information like bank account information, pay stubs and forms of identification before receiving a loan offer with terms including interest rates and fees. Once the borrower accepts the terms, the lender transfers funds to their bank account within a day or two.

Because the requirements to qualify for a short-term loan are more flexible, it’s easier for borrowers with less impressive credit to get approved. Lenders may use a soft credit check, which doesn’t affect the borrower’s credit score, and prequalify applicants for several different loan options that best fit their financial profiles. The quick payout can make it a practical option to help meet immediate needs, including paying off medical bills, debt consolidation and covering unexpected expenses.

The repayment options on a short-term loan are also more flexible than other types of loans. Borrowers can choose to make daily, weekly or monthly payments that align with their budget and preferences. The flexibility can also allow borrowers to experience debt relief sooner rather than later, especially if they repay the loan amount before the end of the term. Some lenders charge early-payment penalties, however, so it’s important to review all the terms carefully before agreeing to them.

Bridge Loans

For investors who aim to increase the value of a multifamily property through strategic renovations or improvements, bridge loans are an attractive option. Conventional lenders tend to be hesitant to finance a multifamily property until it is at full occupancy or has higher rents, but bridge loans are often flexible enough to accommodate these goals.

In addition to being quicker to finance than traditional mortgages, bridge loan terms are also more flexible. The amount of financing you can receive is typically based on the renovation costs rather than on your personal creditworthiness or income. Moreover, it’s possible to purchase properties at auction with these types of loans.

One downside of these loans is that they are not a permanent financing solution. Most bridge loans require that you pay off the debt within a year or less, and some come with prepayment penalties.

Ultimately, the benefits of bridge loans outweigh the drawbacks. They can help you close on new multifamily investments quickly and efficiently, allowing you to make the move into a new home before your current home sells. However, it’s important to weigh all options before deciding whether bridge financing is the best way forward for your apartment investment. Talk to a Janover home lending advisor to find out more about the advantages and disadvantages of this type of financing.