Bridge Loan Help

Jul 15th, 2021 10:36 pm

#1

astley88 [OP]: Banned; Aug 2, 2010; 36 posts; 2 upvotes; Toronto

Jul 15th, 2021 10:36 pm

Hi,

I have sold my current home in Toronto which is closing in early Sep. Buyer has provided 5% deposit. I am potentially making a bid for a home which if successful, will close more than 30 days after the closing of my current home sale. However, I don't have enough cash on hand for the deposit (assuming I need $70k).

1) Is this where the bridge loan come in?
2) how does it work and how is the interest calculated?
3) what is the best bridge loan interest rate available right now in the Toronto area?
4) what do I need to lookout for?

Thank you in advance.

Last edited by astley88 on Jul 16th, 2021 1:18 pm, edited 1 time in total.

Jul 15th, 2021 11:14 pm

#2

ZxExN: Deal Addict; Nov 30, 2005; 1884 posts; 1459 upvotes; Ottawa, ON

Jul 15th, 2021 11:14 pm

If you are closing on your current home 30 days before buying the new one, why would need bridge financing?

Jul 15th, 2021 11:18 pm

#3

mjkrealty: Jr. Member; Apr 6, 2020; 119 posts; 82 upvotes; Toronto

Jul 15th, 2021 11:18 pm

If the new place is closing after the place you’re selling, there’s no need for a bridge... you’re sitting on cash for a month

GTA Real Estate Agent

Jul 16th, 2021 1:10 am

#4

kittypink: Deal Addict; Jul 4, 2009; 1656 posts; 1055 upvotes; Windsor, ON area

Jul 16th, 2021 1:10 am

The bigger question is where will you be living? If your house closes in early September, you have to be out by then and if your new house closes a month later, you can't move into your new house either. Just something to think about if you haven't already.

+1

Jul 16th, 2021 10:37 am

#5

mounties99: Member; Feb 16, 2007; 456 posts; 212 upvotes; Ottawa

Jul 16th, 2021 10:37 am

Are you talking about the deposit if your bid is successful? If so, you'll need to find a way to come up with the deposit, whether it be using your LoC, or other ways of borrowing. Consequently, you can go in with a lower deposit with an otherwise strong bid and you might be okay.

Jul 16th, 2021 10:54 am

#6

CNeufeld: Deal Guru; Mar 23, 2008; 13006 posts; 9978 upvotes; Edmonton

Jul 16th, 2021 10:54 am

astley88 wrote: ↑ Hi,

I have sold my current home in Toronto which is closing in early Sep. Buyer has provided 5% deposit. I am potentially making a bid for a home which if successful, will close more than 30 days after the closing of my current home sale. However, I don't have enough cash on hand for the downpayment (assuming I need $70k).

1) Is this where the bridge loan come in?
2) how does it work and how is the interest calculated?
3) what is the best bridge loan interest rate available right now in the Toronto area?
4) what do I need to lookout for?

Thank you in advance.

Are you confusing the “down payment” with “deposit”?

C

Jul 16th, 2021 11:52 am

#7

sircheersa: Deal Guru; Feb 22, 2011; 14090 posts; 18017 upvotes; Toronto

Jul 16th, 2021 11:52 am

mjkrealty wrote: ↑ If the new place is closing after the place you’re selling, there’s no need for a bridge... you’re sitting on cash for a month

I think he is talking about the deposit, which is usually 5% when you bid. If he bids before his houses sells he will need to come up with that 5% and a bridge loan wouldn't be for that.

Jul 16th, 2021 12:39 pm

#8

Holystone: Deal Addict; Oct 24, 2016; 1456 posts; 1547 upvotes; ON

Jul 16th, 2021 12:39 pm

OP, the bridge loan provided by financial institutions is not for the purposes that you are thinking about. The bridge loan is for when the property you bought is closing before the closing date of the property you sold and you don’t have the required amount of funds available to close the new property. The bridge loan provides you the money till the sale proceeds are realized.

”If you buy things you don’t need, soon you will have to sell things you need.”

+1

Jul 16th, 2021 1:19 pm

#9

astley88 [OP]: Banned; Aug 2, 2010; 36 posts; 2 upvotes; Toronto

Jul 16th, 2021 1:19 pm

Yes, typo.. deposit

Jul 16th, 2021 1:44 pm

#10

CNeufeld: Deal Guru; Mar 23, 2008; 13006 posts; 9978 upvotes; Edmonton

Jul 16th, 2021 1:44 pm

astley88 wrote: ↑ Yes, typo.. deposit

As others have mentioned…. A bridge loan won’t work. You need to find another tool. Either that, or wait for your place to close, then make an offer.

C

Jul 16th, 2021 1:44 pm

#11

reversi: Sr. Member; Dec 26, 2019; 816 posts; 1390 upvotes

Jul 16th, 2021 1:44 pm

You’ll have to come up with the cash on your own.
- Do you have stocks you can sell?
- Line of credit?
- Friends and family?