One of the things many people just don’t know about is that when you’re selling a home and trying to buy one at the same time, you won’t always have to wait for the house to sell before you can buy. With a bridge loan and a good Toronto mortgage broker you’ll be able to get into your home faster than ever. You shouldn’t have to wait just to get into a house, and you won’t have to as long as you work with the right people. Here we’re going to go over what a bridge loan is, how you can get one and if it’s the right thing for your situation.
What is a Bridge Loan?
Bridge loans are just what they sound like: a bridge in financing. Say you’re buying a home (while you have another on the market for sale, this is important!) and you have your down payment and financing… but somehow the numbers don’t match up. In most cases this would mean that you would have to cancel buying a home and lose all of the money you’ve put in so far.
But with a bridge loan and a smart Toronto mortgage broker (don’t do it without one!) you could end up in your new home before you even sell your first one. You’ll be able to bridge the gap in financing to get into the home of your dreams, but you’re going to want to make sure that this is the right type of financing for you. This means going over different options like a better mortgage or different types of hard money loans.
What are the Pitfalls of a Bridge Loan?
No financing is completely golden, and there is one serious drawback to a bridge loan: three mortgages at once. You’ll effective be paying the mortgage on your old property, your new property and servicing the interest on your loan to bridge the financing. If you don’t think you’ll be able to sell your home in time, talk to your real estate agent and see what your options are. You could always try and rent out the property while you’re trying to sell it. You’re going to want to make sure that you can service this kind of debt; it wouldn’t be the first time that someone went under because they didn’t understand their financing.
Is a Bridge Loan Right for You?
If you want to be able to move into a new home before you sell your first one, you’ll be able to with a bridge loan. You’ll want to take a serious look at your finances and talk with a mortgage broker before you rush into anything. That bridge loan is going to be there tomorrow, it won’t hurt you to do your research and see what you’ll be getting into. Think about what a bridge loan would mean for your monthly and long term finance plan. Think about saving up money instead. Whatever you do, talk with a mortgage broker and see how it’ll work out for you. Click here to learn more about our great bridge loans today!