Bridge Financing, the other kind...

First, did you know that the Ambassador Bridge that links Detroit to Windsor and vice versa is privately owned?
Nothing to do with mortgages, it's just something I never considered. There is currently some very large drama going on over there as the US and Canadian governments wish to create a second crossing between the two countries to ease congestion and well, stop paying an American billionaire the privilege of using it. He, of course, is opposed to that idea because that apparently goes against every ideal of free enterprise that his family and bank account holds dear.

But I'm supposed to be writing about the other type of bridge financing as it relates to the mortgage business.

Bridge financing is the term used when the purchase of your new home is tied up (or subject to) the sale of your old home. Many homeowners today, whether upsizing or downsizing their homes lack in having the necessary 5% downpayment for a new purchase. A $300,000 home would still require a minimum of $15,000 down. So instead of draining RRSP's or holding out a hat on a major pedestrian thoroughfare, lenders will allow that down-payment to come from the sale of their old home.

you don't have to be honest about your needs but it helps

5 Reasons to Avoid Big Bank Mortgages

In Canada, there are few things guaranteed. Snow. Taxes. Roll up the Rim to Win.

Wearing out your snow shovel...

We want guarantees. We need them. So when we want that feeling of security that only home ownership provides we turn to the first thing that we think may be able to help us financially; our parents.

But what if you are past that stage of wanting/needing parental assistance? Your second choice is most likely your financial institution. After all, you've been with them probably ever since your parents set you up with your first bank account in a perhaps misguided attempt to teach you about savings and earning interest.

I know that's where I started. I was told that the banks will 'give me money on the money i give them'. It was called interest. So every once in awhile my folks would take me to the local bank and I would give the teller my bankbook and some birthday money from Gramma and the teller would take my money and give me the book back. Inside it were numbers; my previous balance, the money the bank gave me for keeping it there, my deposit and then finally my new total.

The one time i remember registering how much my bank was giving me it was 11 cents. I probably had not been in there for a few months. I remember thinking 11 cents isn't very much. Fast forward 30+ years and I'm still wondering when I'm going to be getting paid for giving my money to the bank to hold for me so that robbers wouldn't get it.

I digress. You are a grown up now and want to buy a house. You need a mortgage because you don't have $400,000 built up from the interest you have earned from your bank. So, after your parents say no, you decide to go to the only place you know that deals with big amounts of money; your bank.

Is that your smartest choice?