More and more homeowners are looking for bridge mortgages to buy a home when they’re not liquid, but why? What can we do for you as a Toronto mortgage broker? What do you need to get a bridge loan? What are they anyway? All these questions and more will be answered here. You want to make sure that you really know what you’re getting into before you get started. It’s always a little risky when it comes to taking out a mortgage, so you need to know that you’re ready and that it’s time to get started.
What is a bridge mortgage?
Let’s say you have a home. You’ve paid off most of your first mortgage and you still have a little to go on your second mortgage. You have a good bit of equity stashed away and you’re trying to sell your home. You’re buying a new home but your old home won’t be sold in time to cover your down payment… what can you do? With a bridge loan you’ll be able to pay off the home and then repay the mortgage as soon as your first home is sold.
Is the Interest Tax Deductible?
The interest on a bridge mortgage MAY be tax deductible, but you’ll want to talk to one of our Canada mortgage brokers to find out for sure. It’s different in every situation and the length of time you’re paying plus how much you have to pay in interest will factor into how much you’re going to be able to deduct on your next taxes. Don’t just take out a bridge JUST because you think it’s something that you can get a tax write off for. Make sure you’re in the right headspace to get the mortgage that’s right for you.
Do You Really Need One?
If you can get a mortgage that will cover the entire cost of your home it would be better – that way you don’t have to pay closing costs on 2 mortgages instead of just the one. Less interest, less risk for losing your home if you just can’t pay it off – you’ll effectively have 3 mortgages running at once in tandem. The less you have to keep track of the better it’ll be for you. Talk with one of our Toronto mortgage brokers and really find out if this is the right option before you take the leap.
What’s the Alternative?
All in all, a bridge mortgage can be fantastic – but it’s good to have some alternatives ready. Think about talking to us to see if we’ll help you get a better deal on your bridge mortgage. Don’t just take a bridge because your lender is offering it to you. You want to always make sure you’re getting the lowest rate possible. Sure, you could always refinance but then you’ll have to pay thousands of dollars more to close all over again.