From a lenders perspective, a Bridge loan is when a client has a firm sale with subjects removed on their existing property and has purchased another property with a closing date prior to the closing date on the new purchase. Sometimes people do this intentionally so that they can have a few weeks to paint the home and move in slowly… and sometimes it’s because they just couldn’t get the dates to line up. In this situation, the answer to the question is – yes, we can arrange a bridge loan for the client. Though keep in mind, usually the lender charges a small fee and a bit of a higher rate because it’s a short term loan.
Most of the time, when I get this question, it’s because a client is wanting to purchase a new home without having their existing home sold. That is not a bridge loan – that is arranging financing to own two homes. In some cases, we can do a refinance on the existing home to take out the equity and use that for a down payment for a new purchase. This would require the client to qualify for two mortgages.
Most lenders won’t grant a loan on a property if it’s listed on MLS, so in this case, it would have to be taken off the market. Yes they might google it! It is rare, with the stringent mortgage guidelines, that clients are able to qualify for mortgages on two homes. In this situation, (which generally arises at the last minute when clients realize they are not going to sell their home in time to complete on their new purchase), we usually have to do a private mortgage. This is an expensive option, but obviously better than the alternative – not being able to complete on the purchase. Because the market has slowed and people are not going to be in the bidding war frenzy of making subject-free offers, we will hopefully see this situation less.
We are all here to answer your questions and find solutions for your clients but if you have questions about this specific topic please call me at 604-341-7778