How Does a Bridge Mortgage Benefit You?
If you want to buy a new home before your old home has sold, you may need a bridge mortgage. These allow you to “bridge the gap” between how much you can pay and how much the bank will pay for a new property. They can have a downside since you’ll technically have two mortgages concurrently accruing interest while you wait for your first home to be sold. Here we’re going to talk about the benefits of a bridge mortgage and how you can make the most of one with a Toronto mortgage broker.
What is a Bridge Mortgage?
Like mentioned earlier, it bridges the gaps between two types of financing, but only when you have one home for sale that hasn’t sold yet. So if you’re a first time home buyer who need to bridge the gap between what your mortgage lender will lend and what the asking cost of a home is, this won’t help you. There are a few different lenders who will offer a type of bridge loan that can help you, but you’ll want to talk to your Toronto mortgage broker (or a mortgage broker in your area) to find out what options you have open to you.
Is it Hard to Qualify for a Bridge Mortgage?
There are a couple of ways that you can qualify for a bridge mortgage, but most importantly you have to be currently buying a new home while your primary residence is on the market for sale. Until your previous home sells, you’ll have to pay on both of these mortgages to stay in good standing; if you have problems paying own the debt you could have your mortgage rescinded and land into a whole host of trouble. IT’s important to talk with your mortgage broker to make sure that this is the type of financing that is right for you. There are many ways to finance the purchase of a new home while your current home is on the market!
What are the Benefits of a Bridge Mortgage?
A bridge mortgage allows you to move into your new home much faster than you would be able to otherwise; so instead of worrying about things like selling your home a reduced cost so you can move in a week or two quicker, you’ll be able to take your time selling your home.
You’ll also be able to get money the money that you need to finalize the purchase much faster than trying to find another lender who will give you the entire amount. In some cases you can even sidestep the necessary evil of private mortgage insurance, saving you money each time you make a mortgage payment.
A bridge mortgage isn’t always the best thing for everyone, so make sure you talk to your mortgage broker and see what they have to say about your situation. You may want to look at finding another lender who will give you a better loan amount so you can save, or you may find a bridge mortgage is exactly what you need.
ABOUT THE AUTHOR:
Mike Smith is a mortgage broker and avid blogger for Home Base Mortgages. HBM is a Toronto mortgage broker that provides home mortgages, mortgage refinancing, home equity loans, debt consolidation, private mortgages and second mortgages.