![]() However, the large amount of equity in homes often is larger than personal liquid assets. Due to the expensive nature of bridge financing, using cash to temporarily finance a purchase is much better. ![]() Bridge financing is most often used in real estate because houses are expensive and illiquid assets. It is a type of financing where the borrower who wants to purchase an asset receives a short-term loan to help their current liquidity until they can repay the loan by selling some other asset. Bridge Gap LoanĪlso known as bridge mortgages, interim financing, gap financing, swing loans, and caveat loans, a bridge gap loan refers to bridging the gap between the purchasing and selling of some type of asset. If your province uses a graduated scale for real estate commissions, you can use an estimated percentage. ![]() Real Estate Commission: Depending on where you live, the real estate commission can vary for both buying and selling real estate agents. Mortgage Penalty: If selling your house breaks your mortgage contract, you may be obligated to pay a mortgage penalty, which will be deducted from your maximum eligible amount for bridge financing. Legal Fees: You can expect to incur a value of $500 to $1500 in legal fees, which account for the preparation and recording of official documents. Therefore, you cannot use this amount as collateral for your bridging loan. However, most banks and traditional lenders will require a copy of the sale agreement, so consider other lenders if you aren’t able to obtain one.Ĭurrent Mortgage Balance Remaining: The current mortgage balance remaining is the remaining equity in your home that you do not own. Being conservative and using a low estimate will allow you to maintain a margin of safety when making decisions. Current Home Sale Price: If you are unsure how much your home will sell for, you can use a home value estimator and work under the assumption of such a sale price.
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