I asked my mortgage agent what I need to know about getting a bridge loan

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• I'm considering my options for my next move, so I asked my mortgage agent about bridge loans.
• When moving to a new house, you have a choice about whether to buy or sell first.
• There are pros and cons to both choices, but timing the market is less important than your needs.

My fantastic mortgage agent , Lisa Okun, was a huge help to me when I bought my first home. As I plan my next move, I'm thinking about how to get the timing right.

How do you buy when you already own a home? What if you find your next home before you sell your current one? Is a bridge loan a good option? I sat down with Okun to talk best practices.

What is a bridge loan, and when is it a good idea to have one?

A bridge loan is a short-term loan (often around 45 days) that provides immediate cash flow for your new mortgage . If you buy your next house before firming a sale on your current property, you might need a bridge loan to pay for the new house while you wait for your current home to close.

Bridge loans tend to have high interest rates that are calculated daily. Different lenders have different criteria, stipulations, and limitations for bridge loans. When you get a bridge loan, the lender fronts you up to 100% of your costs ( down payment and closing costs ) until you get your sale proceeds. Once your sale closes, you clear the bridge loan from the proceeds. The cost of carrying a bridge loan may not be very expensive, but that depends on a few things, including how long you need it.

"If you may end up needing a bridge loan, we want to think about where we want to send your new mortgage," says Okun. The lender registers on both properties — the new house and your current home. "In order to get a bridge loan, you have to have your mortgage with that same lender. You cannot get a bridge loan unless you have a firm agreement of purchase and sale on your current home." Okun also says, "Buyers should plan to have their deposit money available. They may need it in order to make their offer … in advance of their sale proceeds."

There are two main ways to buy and sell. You can sell first, then buy later:

• Pro: You know exactly how much money you have to spend on your next place.
• Con: This can put a lot of pressure on your house hunt — you need to find a place to go.

Or you can buy first, then sell later:

• Pro: You know where you're going, and you know what your timeline is.
• Con: You may not sell your home in time to align with the closing of your new home, and you don't know how much your place is going to sell for.

It's important to ask yourself which scenario you can most afford, both financially and in terms of stress.

What are some best practices for getting it right?

If you choose to buy first, before you sell, buy on a long closing, for example, 90 days. Then you have 90 days to sell your place.

Plan, plan, plan ahead. Before you start house hunting, get clear on your criteria for the new house. In anticipation of needing to sell your home, make a list of work that needs to be done to get top dollar for it and start chipping away on those projects as you house hunt.

Run the numbers. Or work with a mortgage agent who can help you run the numbers. You need to know exactly how much you want your new mortgage to be and know the worst-case scenario for the sale of your current house. You want even your worst-case scenario to be enough that you can afford the purchase price on your new house.

Okun warns, "When you're thinking about your sale proceeds, you have to take into account not just how much down payment you want on the new house, but also your closing costs (for example, land transfer costs, legal and Realtor fees)."

Consider whether you're going to take on more mortgage on the new house and factor in new rates. Do you want less mortgage on the new house? Do you want to keep your mortgage the same size because it's working for you? "That's all stuff that you can think about in advance," says Okun.

What about timing your move with the market?

There are lots of reasons people move house. Okun recommends moving based on your own timeline.

Okun lives and works in Toronto, a major city with a wildly inflated housing market that's made international news headlines in recent years.

She advises that market conditions should only factor into your plans up to a point. "You only know in retrospect anyway what happens with the market," says Okun. "The process is stressful enough without thinking about market conditions that are completely out of your control."