What does a bridge loan primarily assist with?

A bridge loan is designed to provide immediate funding to borrowers, typically in situations where they need quick access to capital before securing more permanent forms of financing. This type of loan is often used when a homeowner is purchasing a new property while simultaneously trying to sell an existing one. The bridge loan allows the person to have the necessary funds to complete the purchase without having to wait for the sale of the current property to finalize.

The defining aspect of a bridge loan is its short-term nature; it is meant to "bridge" the gap between the immediate financing needs and the subsequent, more stable long-term financing solutions that will be put in place. This is particularly useful in competitive real estate markets where timing is crucial.

In comparison to other options presented, while renovations, investment property purchases, and commercial transactions may require different types of funding mechanisms, they do not encapsulate the primary purpose of a bridge loan as effectively as the need for short-term funds while awaiting longer-term financing.