Purchase + Refinance Strategy
Buy with short-term financing, then refinance into a long-term loan once stable.
A two-step strategy where a buyer purchases using short-term or alternative financing, then refinances into a longer-term conventional loan once the property or financial situation is stabilized.
How It Works
The buyer acquires the asset using short-term financing (private mortgage, bridge loan, or VTB) that can close quickly and flexibly. Once the asset is stabilized (rented, improved, or the buyer's financial situation improves), the buyer refinances into a conventional long-term mortgage with better terms. The strategy relies on a clear refinance exit and on improving the asset or borrower profile enough to qualify for conventional financing.
Advantages
- Lets buyers act quickly with flexible short-term financing
- Can improve the asset or borrower profile before refinancing
- Access to better long-term rates once stabilized
- Useful for value-add and distressed acquisitions
Considerations
- Carries short-term higher-rate financing until refinance
- Refinance is not guaranteed and depends on conditions at that time
- Two sets of closing costs (purchase and refinance)
- Requires a realistic plan to qualify for the long-term loan
Typical Use Cases
- Buying a property that needs work before conventional financing is available
- Buyers whose income or profile will improve shortly (e.g. self-employed)
- Fast purchases where conventional approval is too slow
- Acquiring distressed or value-add assets
Ideal For
Buyers who can act fast with short-term financing and have a realistic plan to stabilize the asset or their finances to refinance into better long-term terms.
Risk Considerations
If the refinance does not materialize (rates rise, property value drops, or the borrower cannot qualify), the borrower is stuck with expensive short-term financing. The exit plan must be realistic and stress-tested. Legal and financial advice is essential.
Eligibility Considerations
- A realistic refinance exit plan is essential
- The borrower must be able to qualify for long-term financing later
- Short-term financing must be available and affordable in the interim
- Property improvements must be achievable within budget and timeline
Key Terms
Process Overview
- 1
Secure short-term financing to close the purchase quickly
- 2
Stabilize the asset or improve your financial profile
- 3
Prepare documentation for conventional refinancing
- 4
Apply for the long-term refinance with a lender or broker
- 5
Pay off the short-term loan with the refinance proceeds
Frequently Asked Questions
Is the refinance guaranteed?
No. Refinancing depends on rates, property value, and your qualification at that time. The strategy requires a realistic exit plan and a backup in case conditions change.
Does this cost more overall?
It involves two sets of financing costs, but can still make sense when the long-term loan is materially better than what was available at purchase. Run the numbers carefully.
Trio is a marketplace platform, not a financial institution.
Trio Marketplace is not a financial institution, lender, mortgage brokerage or financial advisor. Trio does not provide, approve, arrange or guarantee financing. Financing products and services are provided by independent third-party providers. Eligibility, rates, fees, terms and approval decisions are determined by the applicable provider.
Providers for This Strategy
Independent providers whose services may relate to this strategy. Contact them directly to explore options.
Maple Ridge Mortgage Co. (Demo)
DEMO DATA — for testing only. Not a real provider. Residential and commercial mortgage brokerage.
Range: 50,000 – 2,000,000 CAD
Related Strategies
Mortgage Assumption
Take over the seller's existing mortgage instead of getting a new one.
Private Mortgage
Mortgage financing from a private lender rather than a bank.
Delayed Closing
Push the closing date out to give the buyer time to arrange financing.