Found Your Dream home but Your Existing Home is still on the Market? Bridge Financing May be the Answer
Shopping for a home in the competitive Edmonton market is not an easy task. When you finally find a good house, in a nice neighborhood and at the right price, it is expected that you will act fast to secure the property even before selling your current house. This snap decision lands you in a situation where you are short of finance to put down as a deposit for the new property which then necessitates the use of bridge financing.
What Is Bridge Financing?
In simple terms, a bridge loan is a short-term tool of financing that helps you close (bridge) the gap between the old and new mortgage. Under bridge financing, you are allowed to tap the equity in your current home as a down payment for your new property before the sale of your current property closes.
How Much Bridge Financing Edmonton Loan Do You Qualify For?
Take the purchase price of your new house, subtract the value of the mortgage and initial deposit. What is left is the amount you will need to be financed.
Benefits of Bridge Financing Edmonton
Bridge loans can offer you huge benefits at minimal expense. They are offered for no more than 90 days and only after presenting a firm sales agreement on the current property for re-assurance.
Although bridge loans are more expensive than traditional mortgages, this commensurates the risk that the sale of the current home may not go through as anticipated.
Downsides of Bridge Financing
Just like with a mortgage, you must portray strong credit to be approved
Additionally, not every financial institution will readily offer you a bridging loan
Considerations before Acquiring a Bridge Financing Loan
Although the market is fast and competitive, make sure that you have enough equity in your current home to be approved for bridge financing, and can finance the loan before you purchase a new house. The flipside is that you will be left with two sizeable mortgages to repay.
What do You need To Do?
Work with an accredited and experienced mortgage advisor to guide you through the process of bridge financing. For over 4 decades, BMC Mortgage and Investment has helped countless Edmonton families acquire finance to improve their lives. Contact us today to talk to a mortgage broker with a passion for helping.