Mortgage Timing

Tracy Head • December 21, 2024

Navigating Bridge Financing When Selling and Buying a Home

When clients are selling one home to buy another, realtors strive to align the sale date of the current home with the purchase date of the new one. However, when clients need a few days or even months to transition between homes, bridge financing may be a viable option.


What is Bridge Financing?

Bridge financing allows clients to buy a new home before selling their current one. Depending on the lender, arranging bridge financing can be straightforward, but not all lenders offer this service. In such cases, private bridge financing might be necessary.


Key Considerations Before You Begin

Before agreeing on dates with your realtor, it’s crucial to explore your options:

  • Traditional Banks & Monoline Lenders: Bridge financing is usually simple to organize, with an administrative fee (around $250) and daily interest on the borrowed funds.
  • Strategic Timing: In some instances, bridge financing might not be an option, requiring careful coordination of sale and purchase dates.


When Bridge Financing Might Not Work

  • Your lender doesn’t offer bridge financing.
  • The cost of bridge financing seems excessive.
  • Your current home is on First Nations land (terms of lease agreements often preclude bridge loans).
  • Private bridge financing costs far outweigh the benefits.


Alternative Solutions

If bridge financing isn’t feasible, there are alternatives:

  • Shipping Containers: Companies like Securite or Big Steel Box can provide a container for temporary storage. It’s delivered to your home before the sale, stored securely, and then transported to your new home on possession day. This approach might involve a hotel stay or staying with friends or family.

For example, a recent cost-benefit analysis showed clients saving approximately $4,500 by opting for a shipping container over private bridge financing—even after accounting for hotel stays and dining out.


When Bridge Financing Works

For those able to use bridge financing through a monoline lender, the process is simple and cost-effective. One client paid a $250 fee and approximately $650 in interest for a week, giving them the flexibility to clean both homes and move at a relaxed pace.


Plan Ahead

If you’re planning to have sale and completion dates on different days, consult your mortgage professional before finalizing contract dates.



Thank You for a Wonderful Year
As we head into the new year, I want to express my gratitude for your trust and support. Wishing you and your family warmth and happiness in the year ahead!

Tracy Head

Mortgage Broker

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Buying a Strata Property

By Tracy Head • March 6, 2025
Read the Fine Print After a few recent escapades with condo purchases I think I’d like to talk a bit about doing your homework when purchasing a strata property. Strata properties can offer the convenience of shared maintenance costs, security, benefits like pools and workout rooms, and in some cases a more attractive price point. For people with busy schedules that don’t have the desire to spend time on yard work (or shoveling!) strata properties can be a great fit. Strata properties are usually managed by strata councils. There are legal requirements with respect to meetings, finances and insurance, record keeping, maintenance and upkeep, as well as bylaws and rules. Not all strata properties are created equal. People don’t realize the importance of taking the time to read through the strata documents when they are considering buying a strata property. From a financing perspective there are several pieces that lenders look for. Lenders and insurers (CMHC, Genworth, Canada Guaranty) will read through strata documents, particularly meeting minutes, financials, and depreciation reports. They are looking to see if the building(s) have been well maintained, and if there are adequate funds in the strata’s contingency reserve fund (CRF) to cover any upcoming projects or unexpected issues. They will look to see if the strata has planned and budgeted for ongoing maintenance and updates to ensure the buildings stay in marketable condition. Lenders look to see if there is a rental pool or if there are rental restrictions. They are looking to see if there are any age restrictions. So how does this affect you as a potential buyer? If buildings have not been properly maintained or have had significant structural issues, they are sometimes flagged by mortgage default insurers. This means that those insurers won’t cover new mortgages for people trying to build into the complexes until those issues have been rectified or remediated. If the building has been flagged, it can mean that you are unable to find mortgage financing to purchase a unit in that building. This can also mean increased strata fees to cover big repairs. This may also lead to special assessments. Special assessments are used by stratas to raise significant funds relatively quickly to deal with major expenses. Over the last year I’ve talked to clients that have had to deal with special assessments of $23,000 and $10,000 respectively. Neither of these clients were in the position to come up with the cash, so they are both on payment plans. In both situations this additional monthly payment has created financial distress. Increased strata fees and special assessments can happen in any strata complex, but if you are looking at purchasing a unit in a complex that has ongoing issues or minimal funds in the contingency reserve fund you need to think about what that may look like down the road for your finances. Having said that, just because a building has had issues in the past does not mean you should cross it off your list of potential purchases. Do your homework. Check to see if the strata has dealt with any outstanding issues, and if they have documentation to confirm that. We were recently able to obtain approval in a complex that the insurers had flagged. For over two years the building had been flagged due to maintenance issues. In this case any units that sold were sold to cash buyers as lenders wouldn’t touch the complex. Major work was done and an engineer’s report was ordered to confirm the damage had been dealt with. Both the lender and the insurer went through all of the documents and approved the financing because all issues had been dealt with and the strata has taken steps to rebuild their contingency fund and ensure necessary maintenance is planned for in the future. This felt a bit cautionary. The intent of this information is not to scare you off of purchasing a specific property, but rather to encourage you to do your homework and learn about the strata you are buying into. Your realtor will be able to help you find answers to your questions, and it is important to have your lawyer or notary review the strata documents before you move forward with your purchase. The spring market feels to be picking up. If you are looking to get into the housing market, a strata property might be the ideal fit!

A Fresh Perspective

By Tracy Head • February 24, 2025
Part of what we do as mortgage brokers is explore options for clients.  Recently I worked with two families whose financing had been declined by their banks as the numbers didn’t work. In both cases, the families had already sold their existing homes and written offers to purchase new homes. Both had done well on their sales and had significant equity to work with. They were shocked to learn they didn’t qualify for similar size mortgages. Sometimes a fresh perspective makes all the difference. When I reviewed the first application I took a look at what the outstanding debt. Since they bought their previous home they had purchased two vehicles and were carrying about $12,000.00 on an unsecured line of credit. The vehicle payments were $457 and $692 respectively. For context here, your mortgage borrowing power decreases by about $100,000 for every $475 you have in payments for consumer credit (loans, credit lines, credit cards, etc). Looking at this family’s situation, I suggested using some of the equity from the sale to pay off their truck loan and line of credit. This reduced their monthly payments by $1,052 ($360 towards the credit line plus $692 for the truck) and meant that the numbers work for them to move forward with their purchase. This was a small tweak but made all the difference. My preference is that people put their equity back into a new purchase as opposed to paying off consumer debt. However, this decision needs to be made carefully by the clients as they are the ones ultimately responsible for paying the bills each month. In some cases this is the only way to qualify for a new mortgage. The second family’s application involved a slightly different tweak. When I calculated the funds they had available for their down payment and closing costs, it looked like they had $100,000 available for their down payment. The purchase price on their new home was $549,000. We discussed increasing their down payment to $109,800 which is twenty per cent of the purchase price. They spoke to her parents, and the parents agreed to gift them $10,000 to make up the difference. What this meant for the clients was that we were able to get an approval with a thirty-year amortization. With the increase in amortization and slight reduction in the mortgage amount (additional down payment + no default insurance fee), they qualified for the new mortgage they needed. Again, my preference is to see clients stick with shorter amortizations whenever possible. This family has chosen to have one parent stay at home while the children are young, so the smaller mortgage payments are a good solution for the short term. We talked about options for increasing their payments once the children are in school and the dad is back to work. Each family and situation is different, and often we are able to look for creative options to help find the right mortgage. Sometimes a second set of eyes is all it takes.
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