The average house price in Ontario is $578,000, a figure that has seen a negative 13% change over the last year, according to the Living In Canada website. While home prices across Canada have been steadily rising over the last decade, income levels have not increased at the same rate, making it harder for potential homeowners to finance home construction projects. Luckily, choosing to walk the bridging finance path can help to easily utilize opportunities that are time-bound. While it is a common option for homeowners looking to sell or buy a new home, it can also help you construct your dream house. With this option, you can get to build efficient homes while taking advantage of enticing building discounts. Here’s what you need to know about bridging finance and how it relates to the construction industry.
What Is A Bridge Loan?
A bridge loan is a short-term financing option that provides borrowers with funds to fulfill their construction or home buying goals before they can get a permanent solution. It tends to be fast, secure and flexible for times when you need a quick fund injection. By doing some quick calculations, you can get to decide which bridging loan works best for you. Once you find a permanent financing option, you can then pay up your loan and proceed to repay the permanent version.
Why Should You Consider It?
The average cost of building a home in Canada from the ground is $200 per square foot. This cost can be quite a daunting target for most homeowners. While there are instances where the construction can wait for a long time to get underway, other cases might demand that the construction work starts as soon as possible. For instance, if there is a time-limited discount on building material, then you might need to get a loan fast to utilize this opportunity. Unfortunately, the conventional mortgage system often takes too long to provide you with the needed finances. Bridging finance can provide you with an easily ready finance option within a short period. Additionally, most bridge loans lack repayment penalties. However, you will still need to maintain a good financial profile for both options.
What’s The Catch?
Generally speaking, traditional loans are less expensive than the bridge loans. In exchange for the convenience and short approval periods, the loans tend to come bundled with a high-interest rate. Since you will easily repay the loan with a permanent financing solution that has a lower interest rate, dealing with this disadvantage can be quite easy. Furthermore, the fact that most loans come without a contingency to sell as you buy or construct your new home can make you feel comfortable with using this financing option.