An investor in Vancouver approaches a mortgage agent for a bridge loan. They have purchased a new pre-construction condo for $700,000 that will be ready in 6 months, and they need to sell their current primary residence, valued at $850,000 with an existing mortgage of $350,000, to fund the down payment. What is the primary purpose of the bridge loan in this scenario?

Question: An investor in Vancouver approaches a mortgage agent for a bridge loan. They have purchased a new pre-construction condo for $700,000 that will be ready in 6 months, and they need to sell their current primary residence, valued at $850,000 with an existing mortgage of $350,000, to fund the down payment. What is the primary purpose of the bridge loan in this scenario?

Answer options:

• To provide long-term financing for the new condo purchase.
• To consolidate high-interest debt prior to selling the home. ✅ To cover the down payment on the new condo until the existing home is sold and the equity released.
• To fund extensive renovations on the existing home before listing it.

Correct answer: To cover the down payment on the new condo until the existing home is sold and the equity released.

Explanation: A bridge loan is typically used to bridge the financial gap between the purchase of a new property and the sale of an existing one, providing temporary funds to cover the down payment or other immediate costs.