as written by Sean Rankin, Mortage Agent
Summer is officially in full swing which means vacation time, backyard barbecues, pool parties, etc., but summer is also “moving season”. If you’re one of the many Canadians who will be moving this summer, I want to talk to you about a topic that could be very useful for you: bridge financing.
As the name implies, bridge financing is a type of short-term loan that can help you cover the gap between buying a new home and selling your current one. It can provide you with the funds you need to make a down payment on your new home, pay for closing costs, or cover any other expenses related to your move.
Bridge financing offers certain advantages that can make your move easier and more affordable. Here are a few:
Flexibility – You have more control over the timing of your move. You don’t have to worry about selling your home before you can buy a new one or finding a temporary place to stay while you wait for your closing date. You can move into your new home as soon as it’s available and pay off your bridge loan when you sell your old one.
Confidence – You can avoid some costly mistakes that might arise when buying and selling in a competitive market. For example, you don’t have to accept a low offer on your home just because you need the money quickly or settle for a less-than-ideal home just because it’s available. You can take some time to find the best deal for both transactions and negotiate with confidence.
Savings – You can save money in the long run. Depending on your situation, you might be able to avoid paying for two mortgages at the same time or paying rent while you wait for your new home. You might also be able to avoid paying for mortgage insurance or higher interest rates if you have a larger down payment thanks to your bridge loan.
Of course, bridge financing is not for everyone. It has some drawbacks and challenges that you should be aware of before you apply for it. For example, bridge financing can be more expensive than other types of loans, as it usually comes with higher interest rates and fees. It can also be harder to qualify for, as lenders will look at your income, credit history, and equity in both homes. And it can add more stress and uncertainty to your move, as you will have two loans to repay and two properties to manage.
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