LOOKING AT BRIDGE FINANCING
Friday Jul 07th, 2017Share
LEARN THE FACTS ABOUT BRIDGE FINANCING
1. It's for a specific amount, which is your home's selling price minus your current mortgage and costs (realtor and legal fees).
2. It's for a short period of time (like 1-30 days) and your lender will need a firm agreement of Purchase and Sale for the property you sold and will check if all conditions are met.
3. Not all Lenders offer bridge financing loan, although there are private lenders that meet this need.
4. The bad news - expect to pay more. Your bridge is going to be at higher rate than your mortgage, and will include administration fees, even when the bridge loan is with the same lender. Bridge loans from private lenders will likely have higher rates and fees but might offer more flexible terms that makes it convenient for majority of homebuyers.
5. Plan in advance in case. Meet with mortgage professional to discuss your ability to carry 2 mortgages in the event that a rare or worst case scenarios plays out. Your lawyer will pay out your bridge loan from the sale proceeds of your home that was sold. If for any reason the sale falls through, your lawyer will register the bridge i.e. over 30 days, or for an amount over the lender's maximum, your lender may register a charge against the property and your costs will likely increase.