Shopping for homes in a hot market is no easy task. Many times, people will buy prior to selling. With this comes a very common question - what happens if the purchase and selling closing dates don’t match?
This is when Bridge Financing comes into play.
What is Bridge Financing?
Simply put, it is a bridge loan that is used as a financing tool that allows you to bridge the gap between your old and new mortgage.
Bridge loans are temporary loans. In other words, you’re effectively borrowing your down payment on the new home.
How Does It Work?
To calculate how much your bridge loan could be, you could use this formula. Take the purchase price and minus it from your mortgage amount and minus that from your deposit. This will give you the bridge loan amount.
Please keep in mind that rates with bridge loans are slightly higher and there are administration fees attached to them too.
If you would like to learn more about bridge financing, feel free to reach out to me as I would be happy to help.