Written by Ozzy De La Paz Maldonado   |   Posted on   |   133 views

If the home you are purchasing closes before the home you’re selling, this type of temporary loan will “bridge the gap” until you receive the proceeds from your sale. 

So how does Bridge Financing work?

Most importantly, your home must be sold firm.  That means there are no conditions outstanding on your sale: no home inspections, no financing conditions, no appraisals.  The deal is totally done and just awaiting closing.

If your home sale is still in the conditional phase, a lender won’t be able to process bridge financing quite yet.

Typically, bridge loans are provided for a maximum of 60 days.

So when we say these are short-term, temporary loans, we mean it!

How much do bridge loans cost?

It varies from lender to lender.  We recommend speaking to a bank or mortgage advisor about what they offer.

But generally speaking, the more you borrow, the more it will cost you.  You may see interest rates for bridge loans come in around Prime +3-4% and you may also find some set-up or legal administrative fees.

It’s definitely something you’ll have to budget for!

The bottom line:

If you can manage to line up both your purchase & sale closing dates, you can avoid bridge financing altogether. Carrying a bridge loan has risks and costs that you may want to avoid altogether.

However if you absolutely need to set up this type of temporary financing, we recommend speaking to a mortgage professional as soon as possible to learn about your options.  They’ll be able to find you the best solution to bridge the time between closing dates.

*All information provided by the Brantford Regional Real Estate Association (BRREA) and ITSO for the highest sales volume and highest number of completed transactions since January 1, 2015. All Brantford MLS® House Listings come from the various systems operated by Real Estate Boards and Associations across Canada. The trademarks REALTOR®, REALTORS® and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA. Used underlicense. The trademarks MLS®, Multiple Listing Service®, and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA. Used under license.



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