Comments on: Reader Question: Bridge Financing http://www.canadiancapitalist.com/reader-question-bridge-financing/ Helping you invest and prosper Sat, 11 Feb 2012 19:27:54 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Multiple Egg Baskets http://www.canadiancapitalist.com/reader-question-bridge-financing/#comment-232609 Multiple Egg Baskets Mon, 12 Jul 2010 22:57:04 +0000 http://www.canadiancapitalist.com/2007/04/04/reader-question-bridge-financing#comment-232609 The interesting thing about bridge financing is that if you stick with your current lender then you can avoid all of the service fees. I found that out the hard way. So now I have to add the 1k service fee that the new lender is charging me in order to have bridge financing in place. I have to adjust my numbers and revisit breaking my current mortgage. The interesting thing about bridge financing is that if you stick with your current lender then you can avoid all of the service fees. I found that out the hard way. So now I have to add the 1k service fee that the new lender is charging me in order to have bridge financing in place. I have to adjust my numbers and revisit breaking my current mortgage.

]]> By: jothy http://www.canadiancapitalist.com/reader-question-bridge-financing/#comment-193730 jothy Thu, 18 Jun 2009 12:16:41 +0000 http://www.canadiancapitalist.com/2007/04/04/reader-question-bridge-financing#comment-193730 i have open variable mortgage now. I have sold my home. I am going to move to new home. Can I carry the same mortgage to my new home? Is variable open is portable? i have open variable mortgage now. I have sold my home. I am going to move to new home. Can I carry the same mortgage to my new home? Is variable open is portable?

]]> By: Vic Perroni http://www.canadiancapitalist.com/reader-question-bridge-financing/#comment-79563 Vic Perroni Sun, 11 Nov 2007 21:08:55 +0000 http://www.canadiancapitalist.com/2007/04/04/reader-question-bridge-financing#comment-79563 I am highly interested in obtaining commercial bridge financing , 6 to 12 months ... It is a big problem here in Canada ! Anyone can contact Me at my email vicp@rogers.com I am highly interested in obtaining commercial bridge financing , 6 to 12 months …
It is a big problem here in Canada !
Anyone can contact Me at my email vicp@rogers.com

]]> By: JM http://www.canadiancapitalist.com/reader-question-bridge-financing/#comment-27885 JM Tue, 10 Apr 2007 05:02:45 +0000 http://www.canadiancapitalist.com/2007/04/04/reader-question-bridge-financing#comment-27885 Thanks for the comments. Your comments answered my questions, and many more. CC - you have a great/helpful blog Thanks for the comments. Your comments answered my questions, and many more.

CC – you have a great/helpful blog

]]> By: Rob http://www.canadiancapitalist.com/reader-question-bridge-financing/#comment-27360 Rob Sat, 07 Apr 2007 14:04:02 +0000 http://www.canadiancapitalist.com/2007/04/04/reader-question-bridge-financing#comment-27360 My quick comment on bridge financing: Refuse to pay the fee for the bridge. Banks will charge you a per-day interest rate (which is certainly fair since you're using their money), but they also will often tack on a fee for the bridge service, often to the tune of $250 or $500. If the bank is getting your mortgage business, they don't need to charge you a fee for the entire transaction to be profitable for them... so refuse to pay it. For clarity, pay the interest, but refuse to the pay the fee. Obviously, you need to arrange this prior to the closing dates, and you will enjoy the most success when you have a competing bank's offer to waive the fee. If the bank believes you are ready to switch over the issue, they will not let the business walk out the door. Negotiate this point last, after all rates are worked out and in writing. I have a 100% rate negotiating this for my clients, and I am sure that, done as described, Canadian Capitalist readers will enjoy equal success. My quick comment on bridge financing: Refuse to pay the fee for the bridge. Banks will charge you a per-day interest rate (which is certainly fair since you’re using their money), but they also will often tack on a fee for the bridge service, often to the tune of $250 or $500.

If the bank is getting your mortgage business, they don’t need to charge you a fee for the entire transaction to be profitable for them… so refuse to pay it. For clarity, pay the interest, but refuse to the pay the fee.

Obviously, you need to arrange this prior to the closing dates, and you will enjoy the most success when you have a competing bank’s offer to waive the fee. If the bank believes you are ready to switch over the issue, they will not let the business walk out the door. Negotiate this point last, after all rates are worked out and in writing.

I have a 100% rate negotiating this for my clients, and I am sure that, done as described, Canadian Capitalist readers will enjoy equal success.

]]> By: sarah http://www.canadiancapitalist.com/reader-question-bridge-financing/#comment-27055 sarah Thu, 05 Apr 2007 17:52:37 +0000 http://www.canadiancapitalist.com/2007/04/04/reader-question-bridge-financing#comment-27055 Canadian Capitalist: The revolving part of the HELOC is at prime. You can choose, however, to lock in any portion of the HELOC as a mortgage. Ex: 300k mortgage Lien on house: 300k sub accounts: Revolving: 100k Prime rate Minimum payment: Interest only Maximum payment: None Fixed: 100k 5.38% Fixed Closed, 5 year term, 15 year amortization Minimum payment: Principle + Interest Maximum payment: 2x minimum payment every payment + 15% of original balance per year (Please note: The following section is from what I understood from our mortgage specialist - we have a 5 year closed fixed rate but I'm pretty sure that you can choose a to wrap a variable rate mortgage inside of your HELOC too). 100k Prime -.5% variable rate mortgage, 5 year term, 15 year amortization Minimum payment: Principle + Interest Maximum payment: 2x minimum payment every payment + 15% of original balance per year You can have, at any time, a maximum of 300k owing. Any amount you pay down on the fixed portion can be reborrowed from the revolving portion at any time. Canadian Capitalist:

The revolving part of the HELOC is at prime.

You can choose, however, to lock in any portion of the HELOC as a mortgage.

Ex:

300k mortgage
Lien on house: 300k
sub accounts:

Revolving:
100k
Prime rate
Minimum payment: Interest only
Maximum payment: None

Fixed:
100k
5.38% Fixed Closed, 5 year term, 15 year amortization
Minimum payment: Principle + Interest
Maximum payment: 2x minimum payment every payment + 15% of original balance per year

(Please note: The following section is from what I understood from our mortgage specialist – we have a 5 year closed fixed rate but I’m pretty sure that you can choose a to wrap a variable rate mortgage inside of your HELOC too).

100k
Prime -.5% variable rate mortgage, 5 year term, 15 year amortization
Minimum payment: Principle + Interest
Maximum payment: 2x minimum payment every payment + 15% of original balance per year

You can have, at any time, a maximum of 300k owing. Any amount you pay down on the fixed portion can be reborrowed from the revolving portion at any time.

]]> By: Nord64 http://www.canadiancapitalist.com/reader-question-bridge-financing/#comment-27054 Nord64 Thu, 05 Apr 2007 17:15:29 +0000 http://www.canadiancapitalist.com/2007/04/04/reader-question-bridge-financing#comment-27054 Just on a side note, a good friend of mine tried last year to get bridge financing for his new house because the old one was not selling in time. Several banks would not give him bridge financing, unless the old house had be firmly sold. In the end he made it because the old house sold and closes within 4 weeks Just on a side note, a good friend of mine tried last year to get bridge financing for his new house because the old one was not selling in time. Several banks would not give him bridge financing, unless the old house had be firmly sold. In the end he made it because the old house sold and closes within 4 weeks

]]> By: Jennie http://www.canadiancapitalist.com/reader-question-bridge-financing/#comment-27051 Jennie Thu, 05 Apr 2007 16:58:17 +0000 http://www.canadiancapitalist.com/2007/04/04/reader-question-bridge-financing#comment-27051 TD HELOC (Home Equity Line of Credit) is at prime, 6% currently. Unless you (like Brad) like to have flexibility on draw down, the rate on TD variable rate mortgage is much better, at Prime minus 75bps or even 90bps depending on the negotiation skills. TD HELOC (Home Equity Line of Credit) is at prime, 6% currently. Unless you (like Brad) like to have flexibility on draw down, the rate on TD variable rate mortgage is much better, at Prime minus 75bps or even 90bps depending on the negotiation skills.

]]> By: Bryce http://www.canadiancapitalist.com/reader-question-bridge-financing/#comment-27032 Bryce Thu, 05 Apr 2007 15:46:20 +0000 http://www.canadiancapitalist.com/2007/04/04/reader-question-bridge-financing#comment-27032 Brad, It doesn't sound like you are going to be affected to much by changing interest rates so why not just go for a variable open mortgage and then you can pay what ever you want on it. I have a 3 year open that is at prime-0.85 from BMO. I don't know it they still have that one or not. Any principal that I pay over and above amortization period is still accessable to me. You just can't go deeper. Brad,
It doesn’t sound like you are going to be affected to much by changing interest rates so why not just go for a variable open mortgage and then you can pay what ever you want on it. I have a 3 year open that is at prime-0.85 from BMO. I don’t know it they still have that one or not. Any principal that I pay over and above amortization period is still accessable to me. You just can’t go deeper.

]]> By: Steve Heath http://www.canadiancapitalist.com/reader-question-bridge-financing/#comment-27016 Steve Heath Thu, 05 Apr 2007 14:47:52 +0000 http://www.canadiancapitalist.com/2007/04/04/reader-question-bridge-financing#comment-27016 Brad, I echo the others with getting a mortgage and dropping down the amortization period. On top of that, you will usually be able to do an extra 15% of the original mortgage amount as extra payments, which would let you drop up to another $45,000 / year on a $300,000 mortgage, which should give you more than enough room to accommodate any extra payments you would want to put on, negating the benefit of the LOC, leaving the lower interest rate on the mortgage as the key difference. Brad, I echo the others with getting a mortgage and dropping down the amortization period. On top of that, you will usually be able to do an extra 15% of the original mortgage amount as extra payments, which would let you drop up to another $45,000 / year on a $300,000 mortgage, which should give you more than enough room to accommodate any extra payments you would want to put on, negating the benefit of the LOC, leaving the lower interest rate on the mortgage as the key difference.

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