Bridge Financing in Canada: Buying Before You Sell, Explained
By Jordan Ellis · Published · Reviewed
Quick Answer
Bridge financing is a short-term loan that lets you access your current home's equity for a new down payment before your sale closes. Lenders advance the gap between your equity and what you need, charge roughly prime plus 2-4% (about 6.5-8.5% with prime at 4.45% in September 2026) calculated daily, plus a $250-$500 administration fee, for terms of a few days up to about 90 days. On $150,000 bridged for 30 days at 8%, the interest is about $1,000. You almost always need a firm, unconditional sale agreement on your current home — no signed sale, no bridge.
You found the next house. Yours hasn’t sold yet — or hasn’t closed yet. Bridge financing is the short, expensive loan that spans the gap, and it works exactly like this.
The mechanics
Say your current home sold firm for $700,000 with a $300,000 mortgage — $400,000 of equity coming at closing in 60 days. Your new home closes in 30 days and needs a $150,000 down payment now.
The bridge lender advances $150,000 for 30 days, repaid automatically from your sale proceeds by the lawyers at closing. No monthly payments — interest accrues and settles at the end.
The cost, in real dollars
| Bridge amount | Duration | At 8% (daily interest) | Plus admin fee |
|---|---|---|---|
| $100,000 | 15 days | ~$330 | ~$250–500 |
| $150,000 | 30 days | ~$990 | ~$250–500 |
| $300,000 | 60 days | ~$3,950 | ~$250–500 |
Painful per-day, sensible in context: $1,500 to secure the right house beats losing it — or settling for a panic-sale price on your current one.
The conditions lenders actually enforce
- A firm, unconditional sale on your current home — the signed agreement is the collateral story
- Enough equity — the bridge plus your existing mortgage can’t exceed the sale price minus costs
- Same lawyer/notary handling both closings in most cases, so the funds flow cleanly
- Both transactions with the same lender at many institutions — your new mortgage provider typically provides the bridge
The alternatives, cheapest first
- Align the closing dates. Sell first, close both the same day or with a few days of buffer, use a HELOC or line of credit for the small timing gap. Free, but costs you negotiating room on the purchase.
- HELOC draw. If you already have a HELOC on the current home, drawing your down payment from it runs at prime + ~0.5% instead of prime + 2-4% — often the cheapest bridge that isn’t called one. You must qualify carrying everything.
- The buyer’s deposit. Negotiate a larger deposit on your sale and (via your lawyer) apply it toward your purchase — shrinks the bridge to the remainder.
- Family loan. Zero rate, unlimited flexibility, maximum Thanksgiving tension. Get it in writing anyway.
Before you sign anything
Get the bridge quote in writing — rate, daily interest, admin fee, maximum term, extension pricing — and stress-test the one scenario that matters: your sale collapses the week before closing. Ask the lender exactly what happens, what it costs per month, and for how long. Then run the total carry of both properties through the mortgage calculator so the worst case is a number, not a surprise. And if you’re early enough in the process, the renewal playbook and porting options may let you move your existing mortgage instead of stacking new ones.
Official sources
Rules and dollar limits change. Confirm current amounts with the official pages below before you act · Last reviewed .