There are times when a homeowner isn’t able to sell their house and buy another because the closing is on the same day. If the home you are buying closes first, you will need funds to close until your house is sold. When this happens the buyer needs to bridge finance or loan. A bridge loan is a temporary financing option designed to help homeowners “bridge” the gap between the time your existing home is sold and your new property is purchased. Your mortgage lender will offer you bridge financing until your house is sold and your solicitor collects the funds from your buyer’s solicitor.
What is Bridge Financing?
Bridge financing is an interim financing option for homeowners who find themselves in this situation. It is a short-term financing tool aimed to bridge the gap between the two different closing dates. It allows homeowners to tap the equity of their existing property as a down payment for the new one while trying to sell their current residence.
Bridge Financing benefits:
- Allows you to close your home purchase before you sell
- It minimizes your financing hassles
- When you do sell, you can use the funds to pay off the bridge loan and any accrued interest.
- Sale Agreement from your current home
- Waiver on the Sale agreement
- Purchase Agreement for your new home
- Waiver on the sale agreement
- Other documents as may be required
The interest rate of a bridge loan is similar to an Open Mortgage. The lender is typically charged a fee to set up the facility.
Our Sunlite Mortgage agents will walk you through the choices available and help you identify the most suitable mortgage products to your current situation while looking at your short-medium term goals. Call a Sunlite Mortgage agent today at 1.877.38LOANS and we will be happy to help you with a mortgage.