When you are selling your home and buying a home, often the 2 dates don’t match up perfectly. If the closing date of buying a home comes before the closing date of the sale, you might need a bridge loan. No big deal. Many banks will do them. We’ve helped our client arrange many of them over the years. Essentially you are carrying both homes for a short period of time. It’s a little more expensive than a regular mortgage, but usually it will only last a few days or weeks.

In order to get a bridge loan, you need a firm offer of sale, and a firm offer on buying a home. In other words, the bridge lender needs to know that the proceeds of the home you are selling will become available on a specific date. If you don’t have that piece of paper and your home is still on the market with only your hopes and prayers that it will sell – well, then it gets a little ugly. This is a kind of unorthodox “bridge loan” and it usually requires private funding. That means buying a home just got more expensive.

This situation is happening a lot lately. We have at least 3 deals in our office at any given time, where the client is scrambling to find a solution. They’re legally obligated when buying a home because that deal is firm, but they don’t have the necessary funds because they’re still waiting for their house to sell.

Just a short time ago, houses were selling within days, but people need to change their mindset. Those days are over. Now houses are sitting on the market longer. Many people are making the mistake of assuming their homes will sell in time – but this is very dangerous. And it can get expensive.

In a case like this, we would recommend to our clients to make the purchase CONDITIONAL on the sale of their home. They it eliminates the risk. We also always recommend to our clients to make any offer conditional on financing. Inspection is a personal choice.

So please talk to us before making any decisions. We can help protect you and reduce your risk.

Robert Floris is a Mortgage Broker. His office is located at 651 Fennell Avenue East in Hamilton, Ontario. If you would like to speak with Robert, he can be reached at 905-574-9200 #215. Alternatively, you can contact Robert here.

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