bridge financing

[macrea]

I currently live in milton but want to buy in Mill pond have any of you out there had a problem with getting the bank to loan you the minimum downpayment until you can get your present house sold?

Thanx,


John

[anxious_f]

I currently live in milton but want to buy in Mill pond have any of you out there had a problem with getting the bank to loan you the minimum downpayment until you can get your present house sold?

Thanx,


John

What you're suggesting is not bridge financing. You probably CAN get the bank to loan you money, but it would be a standard loan/line of credit. They can't lend you the money against the new house, because you don't own the new house and, technically, it has no value yet.

Bridge financing is when you have a firm offer on your current home and close on your new home before your old one closes and there is an overlap where you are carrying both homes. At that point, you can bridge the two mortgages for that overlap period. This means that you pay only the interest on the old property until it closes and the full mortgage on the new property.

The other option is that if you have enough equity in your current home, you can re-finance it and take out a loan against the equity in your home. In order to do this you need to have at least 20% equity in your home. The downfall, obviously, is that it would cost you money (in way of a penalty) to refinance your home in the middle of a mortgage contract.

Your best option is to borrow the money from someone, if you can, or to take out a separate line of credit for the amount that you need.

[K.C.]

The downfall, obviously, is that it would cost you money (in way of a penalty) to refinance your home in the middle of a mortgage contract.

Your best option is to borrow the money from someone, if you can, or to take out a separate line of credit for the amount that you need.

It depends on the kind of mortgage you have. We didn't have to pay a penalty to borrow against our equity. Our lender just blended the new loan with the existing mortgage. I'm not sure you want to borrow money from someone else or take out a separate line of credit. Wouldn't that work against you when you actually go to close your house since it would show up as a separate debt? Also a separate line of credit would probably cost you a lot more than blending into your existing mortgage.

[anxious_f]

It depends on the kind of mortgage you have. We didn't have to pay a penalty to borrow against our equity. Our lender just blended the new loan with the existing mortgage. I'm not sure you want to borrow money from someone else or take out a separate line of credit. Wouldn't that work against you when you actually go to close your house since it would show up as a separate debt? Also a separate line of credit would probably cost you a lot more than blending into your existing mortgage.

Depending on the equity in your home it can cost you money to borrow against the equity. Let's say that your home has an appraised value of $300,000 and you owe $220,000 on it. If you need to borrow $25K against your home (regardless of where you are borrowing it from) you would now actually owe $245,000. Since if you finance more than 80% of your home's value, you have to go through CMHC or Genworth Financial, you would need to pay those fees on your home. If you are still leaving 20% equity in your home, then you don't need to worry about this.

As far as how it affects your approval for your mortgage, it makes no difference whether you borrow the money against the equity in your home or from another avenue, since the approval is based on your GDS and TDS ratios. As long as those remain under roughly 32% and 40% respectively it makes no difference where the money comes from. This is why borrowing the money from someone privately (if that luxury is available to you) is the best way to do it. If you are able to borrow the money from family (even signing a promissory note to them from the equity in your current home) then this would never show up on your credit report and be transparent to the bank.

[K.C.]

I see! I don't have any relatives that will loan me money :)

[anxious_f]

I see! I don't have any relatives that will loan me money :)

Most of our money was tied up in our current house and I didn't want to go through the process of refinancing so my mother was able to help us out with some of the initial deposit and we covered the rest. It was nice. That's why I know what can/needs to be done, because I went through that myself. In fact, the only reason that we went with a 34' and not a 43' was because that extra $5K up front was too much for us to come up with.

It's crazy how much Mattamy expects from you upfront. I've never heard of a builder requiring as much as they do.

[K.C.]

It's crazy how much Mattamy expects from you upfront. I've never heard of a builder requiring as much as they do.

If Mattamy was a girl you'd have to marry her first!

[Style]

If Mattamy was a girl you'd have to marry her first!

Actually Mattamy is half girl! Peter Gilgan the CEO of mattamy named the company after his two oldest kids Matt and Amy! the Stelumar plant in Milton where they build the homes inside is named after his three middle kids Stephanie, Lucas and Marcus!

So you learn something new everyday about where the names actually come from!:)

[smartsexystylish]

Actaully Mattamy is half girl! Peter Gilgan the CEO of mattamy named the company after his two oldest kids Matt and Amy! the Stelumar plant in Milton where they build the homes inside is named after his three middle kids Stephanie, Lucas and Marcus!

So you learn something new everyday about where the names actually come from!:)

Hey Frank,
Where did you get that from? I've heard the Matt & Amy rumors but I've always wanted to see a source lol
And I've never heard about the stelumar plant being named after them, but I think that's pretty cool :)

[Style]

Hey Frank,
Where did you get that from? I've heard the Matt & Amy rumors but I've always wanted to see a source lol
And I've never heard about the stelumar plant being named after them, but I think that's pretty cool :)


LOL, When do i ever lie to you buddy! it's true i read it online! Also read that he sold his massive property on the lakeshore in oakville for 35 million dollars during his divorce! Seems like a really nice guy who stays in the background but has built quite a great reputation!

His house was like 32,000 square feet and had like 9 bathrooms, five fireplaces,pool,guest house etc! Quite impressive!

But they bought the land of Mr gilgan to tear the place down and build condos on the waterfront in oakville!

[smartsexystylish]

LOL, When do i ever lie to you buddy! it's true i read it online! Also read that he sold his massive property on the lakeshore in oakville for 35 million dollars during his divorce! Seems like a really nice guy who stays in the background but has built quite a great reputation!

His house was like 32,000 square feet and had like 9 bathrooms, five fireplaces,pool,guest house etc! Quite impressive!

But they bought the land of Mr gilgan to tear the place down and build condos on the waterfront in oakville!

HAHA no no, I was not questioning if it was a lie :)
I just wanted to read up on the interesting background story of it all. Sounds pretty cool lol