Varun Kohli December 30, 2021 No Comments

What is bridge financing

Bridge financing is a short-term lending option that helps homebuyers bridge the gap between their old and new homes when their closing dates aren’t aligned. It is also an excellent short-term solution for buyers to arrange the mortgage financing for their new purchase.

Advantage to bridge financing

The advantages of bridge financing are that you can get the funds you need to close on your new purchase before your existing home sells. The bridge may also give you some money to do touch-ups or renovations to your home before listing the existing property for sale, or perhaps a deposit on your new home.

How does it work?

At Tembo Financial bridge loans are offered to clients without a lengthy list of criteria. We are able to assist clients with the funds that they need to bridge the gap between their purchase and their sale. Bridge financing works by putting a mortgage on your current or existing property, which then gets repaid once your property has sold and closed! With flexible payment structures available, you may not have to make any monthly payments!

Example of bridge financing

You are currently a homeowner at 123 Tembo Drive which is currently on the market for sale.  You accept an unconditional offer from a buyer for your current property, which has a closing date of September 18th for $750,000.00. Your existing home has no mortgage on it therefore you own it free and clear.

In the meantime, you’ve already placed an offer on a new property at 32 Two-way Crescent for $500,000.00, which is accepted with a closing date of August 4th, 45 days before the closing date of your existing home.

In order to close on your new purchase, you’ll need $500,000.00 on your closing date (August 4th), however you won’t receive the proceeds from your sale until September 18th. What do you do?

This is where bridge financing would be used, as you would take out a short term $500,000.00 loan for the 45 interim days between your purchase closing (August 4th) and your sale closing (September 20th). When your existing home sells on September 20th Tembo would get repaid from the sale of your home and therefore you would then own your new home free and clear.

This situation is quite common, as exact closing dates aren’t always possible. Bridge Financing is often difficult to obtain from a bank, especially if the gap is greater than 30 days.

Need an alternate, short term loan option? Tembo Financial can help!  Tembo offers this unique service to homeowners across Ontario and the GTA.  You could receive your money in as little as 48 hours with no credit check and no appraisal* for expenses that matter to you.  Don’t wait, start today!

*All bridge financing in Ontario is subject to credit and underwriting approval. Loan amounts and interest rates change based on each borrower’s situation. There are no guarantees that the outcomes from a bridge loan will be the same for all clients.

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