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Single Pay Loan
A single pay loan is a short term loan that requires the full payment of principal and interest at maturity.
This is very different from a regular mortgage which has a long term tenure and require monthly payment of debt obligations.
Also known as a sleeper note, a single pay loan is usually short term and don’t stretch for over 6 months.
Because of the structure of such loans, they are very suitable for flippers and their flipping activities.
A flipper can obtain short term financing for a fixer-upper, get cosmetic repairs done, and quickly sell a property within that time frame and pocket a tidy profit for himself.
This is also one of the reasons why professional flippers often set themselves a target of complete a whole project from purchase to sale within 6 months.
Single pay loans can also be used to describe bridge loans where a home buyer needs funds to purchase a house, and later use proceeds from the sale of his existing house for the payment of the purchase.
A single pay bridge loan would enable him to fill that finance gap to undertake such strategy.