Interim Financing/Bridge Financing

Possession dates don’t match up?

No problem, we have a solution for you with flexible bridge loan options.

The true purpose of interim financing is to bridge the gap between the sale and possession dates of two properties. Not every lender will offer bridge financing but MMG Mortgages can navigate the options and next steps. The banks will charge a basic administration set up fee and will charge interest per day on the bridged funds (ie: the down payment amount, less deposit).

Bridge financing is also known as a bridge loan or interim financing.

Here are some key aspects of bridge financing:

  1. Real Estate Transactions: The most common use of bridge financing is in real estate. It can be helpful when a homeowner wants to buy a new property before selling their current one. This is especially useful in a competitive housing market where securing a new home is a priority.

  2. Short-Term Loan: Bridge loans are typically short-term loans, with terms ranging from a few weeks to a few months. The borrower intends to repay the loan once their existing property is sold or they secure permanent financing.

  3. Higher-Interest Rates: Bridge loans often come with higher interest rates compared to traditional mortgages or loans. This is because they are considered riskier due to the uncertainty of when the existing property will be sold or permanent financing will be obtained.

  4. Loan Amount: The loan amount for bridge financing is typically based on the equity in the existing property. Lenders may offer up to a certain percentage of the appraised value of the current property or add a contingency amount into the equity position.

  5. Property as Collateral: Just like a mortgage, a bridge loan is secured by the property being sold. If the borrower cannot repay the bridge loan as agreed, the lender has the right to foreclose on the property.

  6. Approval Process: Bridge loans often have a quicker approval process than traditional mortgages, making them suitable for situations where time is of the essence. However, borrowers still need to meet certain eligibility criteria and provide necessary documentation.

  7. Use of Funds: The funds obtained through bridge financing can be used for various purposes, not just for buying a new property. They can also be used for renovations, debt consolidation, or other immediate financial needs.