Everyone wants an easy transition between their first home and their second, but sometimes a bridge mortgage can cost you more than it’s worth. Here we’re going to talk about how bridge mortgages work and what happens when they don’t. If you don’t get the best terms from the outset it’s easy to end up with three mortgages running at the same time – leaving you at risk for losing 2 homes at the same time. Talk to your realtor about how long it’s going to take to sell your first home before you take a bridge loan to cover the cost of the second one. Every month the home remains empty is money down the drain.
How do Bridge Mortgages Work?
Here’s a great example:
You own a house you’re currently selling and you’re about to buy a brand new home. The buyer can’t close until the end of October, but you’re closing on your new home at the beginning of October. You need the money from your first home for the down payment. A bridge mortgage will help you bridge those gaps in financing. Most of the interest might end up being tax deductible.
When Bridge Mortgages Go Bad
Let’s say you want to take out a bridge loan but you’re not sure when you’re going to be able to sell your home. It could be 6 days from now or it could be 6 months; the longer you have to wait to repay the mortgage the worst off you’re going to be. These are short term high interest loans that are there until you’re liquid again… not just because you’re trying to buy something you can’t yet afford. You’re better off waiting to have the cash in hand if you’re going to have to wait any longer than three months to sell.
Getting a Better Bridge Loan
Working with one of our Toronto mortgage brokers you’re going to get a bridge mortgage you can live with now and later. We know how important it is to keep a hold on your equity – plus who wants to have to pay three mortgages at the same time? If we can’t find you a better deal on a bridge mortgage we’ll help you find a mortgage that will give you the money you need to buy a home without one.
Always Know the Cost
Before signing on for any kind of loan or mortgage, you have to know what you’re getting into. Don’t just take the lender’s word for it. We’ll help you understand the terms and if they’re fair; if we can find you a better deal somewhere else we will. It’s so important to work with a Toronto mortgage broker like us to find out what kind of deal you can get before you sign on for one. Don’t take on a bridge mortgage because your lender offers you one – know that the deal you’re getting is the right one for you!
To learn more about our great rates on bridge mortgages, click here!