BRIDGE FINANCING

What is bridge financing?  Bridge Financing is arranging an interim loan with your lending institution, to “abridge”, to have the money needed a few days in advance of the sale of your home, to close on your purchase by way of a loan from the bank. 

By bridge financing, you eliminate the stress of waiting for the sale of your home to close on the same day as your purchase, in order to have the money to close on your purchase.

Bridge financing gives you the luxury to close on your purchase, and a few days later you close on your sale.   When your sale takes place, you then pay back the bank the bridge financing loan from the sale proceeds.   

The cost of bridge financing is not as absorbent as may be anticipated, and may be well worth eliminating the anxiety of closing both deals on the same day. 

There will be an interest charge on the monies borrowed, and with today’s interest rates, may be well worth the while bridging.   Be sure to enquire if there would be an administration fee.  This would be dependant on your lender. 

It is always good idea to deal with the same lending institution that you are using if you are arranging a new mortgage on your purchase, or the bank that you typically use with your daily banking.   By using the same bank, they already have all your income verification, debt to income ratio and any other information needed for you to qualify.

Selling and buying can be a stressful time, why not take advantage of mechanisms to make the experience more enjoyable. 

Breaking Into Property Investment.  Things to Consider. 

Investing in real estate is intriguing, and can be intimidating if it is your first investment property.  Where do you begin is a big question. 

Know the area where you want to make your investment.   Drive around, see what is in the area that is relatable to the property, such as schools, transit, work place, stores. etc. 

Be informed of any rental restrictions that may be imposed in the area.  Check with the City of Town to see if there are any by-laws restricting rentals.  

Know your financing.   You will require a minimum of 20% downpayment of the purchase price for an investment property. 

Know what your expenses will be in addition to the purchase price of the property. 

Calculate your rate of return on the investment.  

Purchase a property that is manageable.

If you are looking at a residential rental, think of starting with a single rental property,  a condominium, or single family home with a front and back yard.

Being a Landlord comes with responsibilities, in particular maintenance and repairs.  Educate yourself to know these responsibilities. 

Familiarize yourself with the standard Residential Tenancy Agreement, which is a standard lease agreement to be entered into in Ontario for all residential tenancies.  This form can be obtained at www.forms.ssb.gov.on.ca.  and search Residential Tenancy Agreement. 

If you are looking at a commercial investments, most of the same steps would apply.  

Hire the right realtor to help you with your investment and potentially find you the right tenant.

RENEW YOUR MORTGAGE OR REFINANCE.

Much to consider.  Make informed decisions!

At renewal time, take a close look at your current financial situation, and the costs related to some other current debt you may be carrying, such as credit cards.

Do you need to consolidate some existing debts to reduce overall payments,  taking advantage of the current low interest rates. 

Would you like to take some equity out of your home to purchase another property. 

Would you like to renovate.

Do you have added children expenses to cover.

Are you happy to renew your mortgage and continue to pay down your mortgage at the current balance. 

Think about speaking to your existing Lender to see if they are able to offer you a better interest rate than what is currently posted by the banking institution.  Chances are they would like to keep you as a client, and will do their best to give you the best possible rate they have to offer.    This too could potentially save you some added costs. 

Do some reach with other Lenders to see what rates they have to offer.   Have a conversation with a Mortgage Broker, who would have access to more than one lending institution.  

Take the time to investigate and ask questions, the extra effort may potentially save you money.