Bridge Financing

A bridge loan is a temporary loan that facilitates closings when the purchase of a customer's new home closes before the sale of their current home. Bridge financing allows customers to borrow funds based on the net equity in their current home in situations where that equity is tied up until the closing date of their current home.

• Calculation of net proceeds is the sale price less existing mortgage(s) balances less 7% of sale price for closing costs.
• Maximum term is 45 days. Exceptions are permitted up to a maximum of 120 days, subject to a collateral second mortgage being registered on the property being sold.
• The maximum bridge loan amount is the lesser of the downpayment required or the net equity in the property being sold to a maximum of $150,000. Bridge loans that exceed $150,000 must be secured by a collateral second mortgage on the property being sold.
• Minimum bridge loan is $5,000.
• A fee of $250 is charged for all bridge loans, whether or not a collateral second mortgage is registered. No discharge fee is applicable in these cases.
• Bridge loans are not permitted to facilitate on time closings as a result of land registry system delays in Alberta, Saskatchewan and Manitoba. In these cases, MCAP will permit closing to occur using GAP Insurance protection.
• The completion date of the purchase must be prior to the completion date of the sale.

Requirements

• Copies of the Agreement of Purchase/Sale for both the existing property and the subject property being purchased must be obtained and the following confirmed:
  • That both Agreements of Purchase/Sale are binding contracts;
  • That all conditions have been removed; and
  • That the deposit on the existing residence/property has been received and is a minimum of 5% of the purchase price.
• The following documents must be received before the new mortgage is advanced:
• The Declaration and Direction;
• The Promissory Note; and
• The Assignment of Funds and Direction to Pay

Early Bridge Loans

Early Bridge loans for the purpose of advancing client funds to complete deposit requirements are available:

• when the subject mortgage transaction is a purchase AND
• the downpayment is coming from the net proceeds of a sale AND
• in Alberta and Saskatchewan only.

Early bridge loans may be advanced up to a maximum of 15 working days prior to the completion of the mortgage transaction.

Please do not hesitate to contact your mortgage broker for further details about bridge financing.