Bridge financing also known as interim financing is used when the borrower has purchased a home and the purchase is completing before the sale of their existing home closes. The lender supplying the mortgage on the new home lends the borrower the down payment to close on the new home. In short bridge financing is an unsecured loan for the down payment.
Once approved for bridge financing, a promissory note and assignment of sales is signed to the borrower, once approved by the lawyer the funds are released. When the home sells, the lawyer pays the principle plus interest directly back to the lender from the proceeds of the home.
The interest on the bridge financing is prime + depending on the lender. Some lenders do charge an administration fee which can be between $50 -$350. There will also be an additional fee at the lawyer’s office for disbursement cost.
Make sure that if you need to use bridge financing that you are aware of what the cost associated with this option is so you do not have any surprises.
For more information regarding Bridge Financing, give the professionals a call at:
(204) 987-2100 or 1 888-880-2121