Bridge Financing: Mortgages 101 with Red Key Mortgage

In this video, I will answer a few key questions related to Bridge Financing:

1. What is Bridge Financing?
Bridge financing is a short-term or interim loan that helps cover the gap when you take possession of a new home before the sale of your current home is finalized. It’s ideal for situations where closing dates don’t align.

2. What’s the Benefit?
The main benefit is convenience—it gives you time to move out and settle into your new home without the stress of same-day closings.

3. How Do I Get One?
Almost all AAA lenders offer bridge financing if they are also providing financing for your new purchase. The primary requirement is a firm or unconditional sale of your existing home.

4. How Much Does It Cost?
The cost of bridge financing varies by lender, but most charge a setup fee of around $250, plus daily interest based on Canada’s prime lending rate. For example, a $100,000 bridge loan generally costs $15–$25 per day in addition to any one-time setup fees.

Lenders wouldn’t offer interim financing if they didn’t have to—it involves a lot of additional legal work for minimal profit.

Have any questions? Let us know!
At Red Key Mortgage, mortgages are simple for us. Let us make them simple for you.

Video Highlights:

What is Bridge Financing?
An explanation of bridge financing as a short-term loan that covers the financial gap when purchasing a new home before the sale of an existing property is finalized.

The Benefits of Bridge Financing

How bridge financing provides convenience and reduces stress by allowing homeowners to transition smoothly without worrying about same-day closings.

How to Qualify for Bridge Financing
An overview of the primary qualification criteria: securing a firm or unconditional sale on your current home and working with a lender providing financing for your new purchase.

The Cost of Bridge Financing
A detailed breakdown of typical costs associated with bridge financing, including setup fees and daily interest charges, with an example for better understanding.

Why Lenders Offer Bridge Financing
Insights into why lenders provide this service despite the additional legal work and limited profitability, emphasizing its necessity in certain real estate transactions.

Simplifying the Process with Red Key Mortgage
A reassurance that Red Key Mortgage makes the financing process simple and stress-free for clients, offering expert guidance and personalized solutions.

Takeaways

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  • Bridge financing is a practical solution for homeowners needing to bridge the financial gap between purchasing a new home and selling their current one.
  • The key benefit is convenience, allowing for a smoother transition without the pressure of same-day closings.
  • Qualifying for bridge financing requires a firm or unconditional sale of your existing home and working with a lender handling your new purchase.
  • Costs typically include a setup fee and daily interest based on the loan amount and the prime lending rate.
  • Lenders offer bridge financing as a necessity despite limited profitability, ensuring smoother transactions for borrowers.
  • Red Key Mortgage simplifies the process, providing expert guidance and tailored solutions to meet individual needs.needs.
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