Do you currently own a property and are looking to upsize? Once you have found the new property of your dreams, you may have to sell your existing home in order to purchase the new one. If this is the case, when you put down an offer on your new property, you would make it conditional to the sale of your existing home.
Great news, your offer to purchase your new home gets accepted! If you don’t already have your current property for sale on the market, then time to do so! Bridge financing comes in to play if the purchase date of your new home is before the sale date of your existing property. The bank bridges this gap, by lending you the complete amount of the purchase price knowing that when your property sells you’ll be able to reimburse the bridge loan.
Banks will only offer bridge financing for a couple of months at best, and will want to know that you have a firm unconditional offer on your current home before accepting to bridge your loan.
Interest rates are higher on the bridge loan, so it’s important to note that this is only a temporary fix. None the less, a bridge loan can be a valuable tool, as it allows you to simplify a potentially complex situation.
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