Bridge Financing/Fully Open Term

“Subjects came off their current home last week but their new place closes Friday…”

Here’s a funny thing about bridge financing: everyone thinks it’s complicated. It’s not. Someone needs to close on their new house before their old house sells. Or their sale fell through after they removed subjects on their dream home. Or they found the perfect downsizer condo but haven’t listed the family home yet.

Banks? They’ll politely explain why this is impossible. Too risky. Too short-term. Too much paperwork for a loan that might last three weeks.

We’ll have it funded by Thursday.

The slightly absurd economics of traditional lending

Banks make their money on the long game. They want your mortgage for 25 years, not 25 days. The math is simple: spending three hours underwriting a mortgage that pays out next month is terrible business. For them.

But here’s what they miss – that retiree in Parksville isn’t asking for charity. They’ve got a $900K house, want to buy a $400K condo, and just need someone to float them the difference for two months. The equity’s sitting right there. Twice over, actually.

The risk isn’t in the loan. The risk is in making people sell their home before buying the next one, in a market where the perfect property might not come up again for years.

Why bridge financing actually exists (hint: it’s not about the interest)

Forget everything you know about mortgage pricing. We don’t make money on bridge loans the way banks make money on mortgages.

Traditional mortgage math: Low/no origination fee + closed term interest rate for years = profit

Our bridge math: Fair origination fee + open term interest rate for weeks = everyone wins

We charge 1.5-3% upfront. Your client pays (or more commonly - accumulates) interest for maybe six weeks. A few months if the market’s slow. Often less. We’re completely fine if they pay us out a week after funding. Fully open. No penalties. No sob stories about lost profit.

The bank would call this insane. We call it Tuesday.

Who actually uses bridge financing?

The downsizing seniors who’ve lived in their 4-bedroom Salmon Arm house for 30 years. Found the perfect condo near the grandkids. But imagine telling them they need to sell first, move twice, maybe miss out on the place they want. We register on their current home, they buy the condo, list when they’re ready. Simple.

The upgrading family whose offer just got accepted on a bigger place. Their current home will sell – good neighborhood, priced right – but not in the next two weeks. Banks see timing risk. We see two properties worth more than the loan.

The relocating professional who got the job offer in Victoria but lives in Kamloops. New job starts in a month. No time for the traditional sell-then-buy dance. We’ll carry both properties until the dust settles.

The caught-in-the-middle buyer whose buyer’s financing fell through a week before closing. They’ve already removed subjects on their next place. Deposits at risk. Moving trucks booked. We fund it. Crisis averted.

The mechanical beauty of inter alia mortgages

Here’s something the banks literally can’t do: secure one mortgage across two properties. They’ve got systems, regulations, check boxes that say one mortgage = one property.

We’ve got common sense.

Your client needs $400K to close on their new place. Their old place is worth $600K with a $200K mortgage. New place is worth $500K. Instead of complicated second mortgages and multiple applications, we do one mortgage across both properties. Total value: $1.1M. Total debt including our bridge: $700K. That’s 63% LTV across the portfolio.

When the old house sells, we discharge it from title, get paid out, everyone moves on. It’s almost embarrassingly simple.

A quick reality check on the numbers

Senior couple in Qualicum Beach. House worth $850K, no mortgage. Buying a townhouse for $425K.

• Without bridge financing: List house, wait, hope the townhouse is still available, maybe rent in between, move twice, storage costs, stress level 11/10

• With bridge financing:

  • Bridge loan: $425K
  • Our fee (2%): $8,500
  • Interest (10% for 2 months): $7,083
  • Total cost: $15,583
  • Peace of mind: Priceless
  • Coffee with grandkids in new kitchen while old house gets staged: Actually priceless

Versus renting for two months ($3,000), moving twice ($4,000), storage ($500), and the therapy bills from the stress? We’re basically free.

Why small-town BC needs this more than anywhere

In Vancouver, your house sells in a weekend. Multiple offers. Cash buyers. The buy-sell timing barely matters.

In Mackenzie? Port McNeill? 100 Mile House? Different story. Houses sell, but on their own timeline. Could be two weeks. Could be four months. You can’t time the market when the market runs on small-town rules.

That’s why bridge financing isn’t just convenient in places like ours – it’s essential. It lets people make rational decisions about their biggest asset without playing chicken with the real estate market.

The institutional inability to think short-term

Big banks have shareholders. Quarterly earnings. Efficiency metrics. A bridge loan that pays out in six weeks? That’s not a product to them, it’s a problem. Their computer systems literally don’t know what to do with a mortgage designed to disappear.

We’re privately funded. Our investors are happy with their returns. A good bridge loan that pays out clean is a win for everyone – borrower gets their house, broker gets paid (fast), we make our fee, investors get their return.

No spreadsheet at head office saying this is inefficient. No algorithm declining it because the term is too short. Just people lending to people who need a few weeks to sort out their lives.

Here’s the thing about bridge financing

It shouldn’t need to exist. In a perfect world, every sale would line up with every purchase. Closings would synchronize. The universe would cooperate.

But that’s not how life works. Especially not in British Columbia, where your perfect retirement townhouse might be 300 kilometers from the house you’re selling. Where markets move at different speeds. Where timing is everything and nothing lines up.

We exist because reality is messy. Because good people with good equity need a few weeks of flexibility. Because sometimes the smartest financial decision is the one that lets you sleep at night in the house you actually want to buy.

Bridge financing isn’t complicated. It’s just lending for the space between what is and what should be. In a province where that space can be pretty wide, sometimes you need a lender willing to build that bridge.

Even if it’s only there for six weeks.