We are not talking about the London Bridge or the Mackinac bridge in this post. We are talking about a Mortgage Bridge.
This can happen in a few ways when you obtain financing.
You buy a house, and your closing on the new purchase is BEFORE the old home sells. As most clients’ down payment comes from the sale of their current home, you will need this equity to complete the current purchase.
This is called a bridge.
A long time ago, the broker/agent used to perform this paperwork. Times have changed, and with most lenders offering this type of bridge, it is done behind the scenes and approved by the lender directly. You as a client would go to the lawyers and sign bridge documents. This is all part of the same approval process.
Bridge costs can range, but Mortgage Suite has seen an average of about $600 dollars to perform this Bridge Paperwork. This fee is payable to the lender.
Bridge Mortgages come with interest and this interest needs to be sufficient. Sometimes you can roll this interest into a Balloon Payment on closing. Most lenders require the interest to be paid. Bridge interest rate rates range from 4% to about 7%. These are lender bridges, not private bridges. You will still need to go through the 3 factor approval process to obtain this bridge.
You can picture a bridge as the use of money for a short period to either bridge a purchase or a construction project bridge.
After the term is up, you must have the approval to remove the bridge and enter into a proper mortgage term. This would be the regular 5-year fixed, or whatever term you choose, but bridges are not forever – 6 months max sometimes.
Please always make sure you review these options with your Broker or Agent at Mortgage Suite. Planning a bridge can be time-consuming and stressful. We can show you the best way for this to happen, and remove these stresses. This also can result in the best terms and rate.
