BRIDGE LOANS EXPLAINED

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BRIDGE LOANS EXPLAINED

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If the property that you’re currently living in and are selling, is set to close only after you close and take possession of your next home (the one you’re buying), then that can make it difficult to come up with the down payment for the property you’re purchasing. This is where a bridge loan, or bridge financing, comes into play. – PowerPoint PPT presentation

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Title: BRIDGE LOANS EXPLAINED


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BRIDGE LOANS EXPLAINED
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  • If the property that youre currently living in
    and are selling, is set to close only after you
    close and take possession of your next home (the
    one youre buying), then that can make it
    difficult to come up with the down payment for
    the property youre purchasing. This is where a
    bridge loan, or bridge financing, comes into
    play.
  • In the majority of instances, most homeowners
    need to sell their existing property to make the
    down payment for their new home, and bridge
    financing gives you the opportunity to make a
    down payment without being forced to wait until
    the sale of your current home closes.

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  • How do bridge loans work and what are the rules?
  • Provided your current home has a firm sale on
    paper, youll find that most mortgage lenders and
    banks will loan you the required down payment to
    close your existing home, as well as the
    remaining money from the mortgage that youve
    been approved for. The following provision should
    be in place for you to be able to take advantage
    of bridge financing
  • A firm sale on your current home, and
    confirmation of qualification for the new mortgage

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  • Its also important to remember that a bridge
    loan is a short-term solution for the down
    payment, and that bridge financing terms apply to
    the down payment and not the mortgage. While
    bridge financing can be immensely helpful, it can
    get costly, so try to use it for a short period
    of time.
  • What are the costs associated with bridge
    financing?
  • There are three main price elements associated
    with bridge loans, they are as follows

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  • Legal costs these typically range from 200 to
    300
  • Lender fee this typically ranges from 400 to
    500
  • Interest rate (prime 3 to 4)
  • Generally speaking, a bridge loan will cost you
    somewhere between 1,000 and 2,000, although
    extenuating circumstances may bump this up, so
    beware. Talk to a professional mortgage advisor
    or broker for more guidance.
  • What can you do other than seek a bridge loan?
  • Unfortunately, if the sale and purchase of your
    existing and new homes cannot be made to coincide
    with one another, then youll need to find the
    money for the down payment from somewhere.

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  • While some individuals may have enough money in
    savings to prevent them from having to use bridge
    financing, or be able to access a gift from a
    family member, most will not, and a bridge loan
    will be their only solution.
  • The entire mortgage process can be confusing,
    costly and longwinded, so it pays to work with a
    professional broker or mortgage advisor to help
    you save money wherever you can, and to make
    intelligent financial decisions that take your
    personal circumstances into account, and are in
    line with your best interests.

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  • Red Key Mortgage is located in Calgary, Alberta.
    We are a boutique brokerage with high volume
    serving hundreds of clients locally and
    nationwide every year. We have a number of
    associates dealing in mortgages as licensed by
    the Real Estate Council of Alberta. As a best
    mortgage broker in Calgary, Red Key Mortgage,
    will provide all of your available options from
    the entire mortgage market and allow you to make
    an educated decision where you'd like your
    mortgage to go. Red Key Mortgage works with big
    banks in Canada, as well as over a dozen other
    AAA lenders. Best of all, our services are paid
    for by the lenders at no additional cost to our
    clients. If you are looking for Calgary mortgage
    brokers, contact us today! We can't wait to get
    started.
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