BRIDGE LOAN TORONTO
Time-effective home equity loans to provide you with the cash you need.
We can get you the financing you need
regardless of its purpose. We have solutions.
Finding a home in a competitive housing market is not easy. North Creek Financial wants to help when you close on your dream home if it’s before your current home sells – this is when you need a bridge loan. Ontario residents can take advantage of this type of loan by bridging the closing and selling gap with a short-term financial solution by allowing you to use the equity on the existing home as a down payment. Ontario’s red hot market has home buyers increasingly utilizing this type of loan because it alleviates the strain on owning two properties.
We determine the amount of the loan by assessing the value of your current home then subtract the value of the mortgage and the initial deposit. The amount left is what is used to calculate the sum that will be used for financing until the sale of the existing home is closed.
Keep in mind that bridge loans are more expensive than traditional loans because they carry more risk due to the potential for the sale of the existing home not closing in time, however the downside of a bridge loan is minimal and we never require a credit check, unlike many other financial institutions.
Where to Find a Bridge Loan in Ontario
All of the Big Five Canadian banks offer bridge loans because of increasing demand for the security it provides. There are also several smaller lenders that offer bridge financing, however it’s best to do so through a mortgage brokerage like North Creek Financial.
How to Qualify for a Bridge Loan
All you need is a copy of your sale agreement of your current home and the purchase agreement of your new home. If you don’t have a firm selling date, then we can help with a bridge loan because the banks require one.
Amount You Can Receive
Lenders can typically provide up to $200,000 for a loan period of 120 days. If a larger loan or a longer term is required, then we evaluate each potential lendee on a case-by-case basis.
How Bridge Financing is Calculated
If your closing date is 70 days away, but the closing date on your new home is in 30 days, then we provide a bridge loan to cover your equity for the remaining 40-day period.
A bridge loan can be used, if for example you want to purchase a home for $400,000 and make a five percent deposit ($400,000 x 0.05 + $20,000), but want to pay $180,000 in equity in your current home.
This makes a bridge loan invaluable if the closing date on the home you purchased is three months before the closing date of your existing home.
All loans are subject to fees and rates are often similar to a personal line of credit. Interest rates on a bridge loan are higher than a mortgage rate, but it will only be for a short payment period, before the equity on your existing home will be able to be repay the loan.
In addition to the interest rate that is charged, there is also a flat administration fee. If you require a larger loan or longer period (more than 120 days) then a lien is registered on your property.
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