Mortgage Free Retirees Need a Bridge Loan

... Mortgage Free Retirees Need a Bridge Loan" />

Getting When You Have Great Assets and No Need For Can Be Problematic

Dear Ross: We finally decided to sell the family home in Markham and move to a waterfront condo near Oakville, Ontario. It just didn’t make sense to maintain a four bedroom house, when it’s just the two of us. Our purchase is September 6th, but our house will not sell till September 27th. We don’t currently have a mortgage and we won’t need one after we move in. But we do need money to bridge the two transactions. Will this be a problem?

-L.P. Oakville

Surprisingly this won’t be straightforward. You’d think lenders would be lining up to help this couple. They have a husky net worth, no debts, amazing histories, and are buying a desirable property. But, they don’t need a mortgage, so whoever offers them a bridge loan for three weeks is going to process a lot of paperwork for very little return.

There is little a can offer in this scenario, so my advice was to approach their preferred bank and ask. But I warned them the answer would probably be no, and they should be waterfront condo prepared to offer their bank an incentive. I suggested they ask their bank to set up a Line of Credit () on the new condo, even though they anticipated no use for one. This would make the bridge loan more worthwhile for the bank.

I pointed out their bank would probably not charge them any set up or fees for the HELOC, and there should be no need for their own lawyer, so basically it would be free. That said, why would they not accept this – especially if they go from being persona non-grata to a desirable client in one fell swoop.

Sure enough, things played out exactly this way. Their problem has been solved. A will be done and after all is said and done, this couple will have a HELOC on their condo – just in case.

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