Bridge financing could have saved the day last month when a series of disasters on closing day caused three related real estate deals to fall apart.  

When a bank pulled the financing  from one buyer at the last minute, it caused all the deals to fall apart because  each one was contingent on the previous seller getting the money to close their  own sale. This is what real estate lawyers refer to as a train wreck.  

If  bridge financing had been used, it’s likely that this could have all been  avoided. In a typical bridge situation, the buyer closes their purchase a few  days before their sale. They go to their bank and ask for a loan, to pay for the  entire purchase, with the understanding they will repay the loan as soon as  their sale closes. The interest is usually prime plus 3% or 4% per day. By  closing a few days early, the interest cost is typically $100 to  $200.  

One of the benefits of closing a few days early is that you can slowly move into your new home. I have heard plenty of stories where buyers are moving out and moving in on the same day and while they are packed up at 1PM, they cannot get into the new home until after 6PM, resulting in additional moving costs, since you typically pay by the hour.  

Click here for the full article in The Star.

“Call Cory for a FREE second opinion on your Mortgage”

-Cory Kline- Mortgage Planning since 1998

Neighbourhood Dominion Lending Centres (705-794-1283 or Cory@ndlc.ca)