Solution: Bridge Financing.
It varies but there will be a fee of $250-$400 plus interest (P+2% or P+3%). Note that the bridge loan is only the amount of down payment minus deposit so interest costs are minimal. There will also be an extra fee from the solicitor. Things to note:
- Usually lenders want less than 30 days difference on the dates.
- The payments for the long term mortgage are not affected by bridge financing. For example the client's regular mortgage payment is on payment schedule.
- The buyer must still pay the property transfer tax, legal fee and other closing costs upfront from their cash resources.
- The buyer must stay with the lender that they do the bridging with. For example they might have a 5 yr variable with that lender.
- A low cost bridge finance must have 2 firm, subject free contracts otherwise we take the mortgage to a private lender and the costs increase dramatically.
- Application must be otherwise strong.
- Some clients have a false impression about bridge financing until details are explained to them. When handled properly bridging is very convenient for some clients