Bridge Financing in Canada: How It Works for Move Up Buyers

Short answer: Bridge financing is a short term loan that gives you the equity from your current home as a down payment when your purchase closes before your sale. You usually need a firm (unconditional) sale. It’s repaid automatically from your sale proceeds and typically costs interest at about prime plus 2% to 4% for the days it’s outstanding, plus a small fee.

What Is Bridge Financing?

A loan that covers the gap between your purchase closing and your sale closing.

Example: you buy on March 1 and your sale closes March 15. The bridge loan covers those 14 days, then your sale proceeds pay it off.

When Do You Need It?

When your purchase closes before your sale and you need that equity for the down payment. If your sale closes first or the same day, you usually don’t.

How It Works

1. Firm sale: most lenders require an unconditional sale agreement.
2. Amount: the loan covers the equity you need, for example $150,000 of down payment tied up in your current home.
3. Short term interest: you pay interest only for days or weeks.
4. Automatic repayment: your lawyer pays it off from the sale proceeds.

What It Costs

• Interest, often prime plus 2% to 4%, charged daily
• A lender admin or setup fee
• Some extra legal work

A two week bridge on $100,000 usually costs a few hundred dollars in interest. A 30 day bridge on $200,000 at 7% is about $1,150.

Risks

Low risk with a firm sale, close dates and an approved mortgage. Higher risk if the sale collapses, the gap is long, or there’s no backup plan.

Does Every Lender Offer It?

No. Some banks do, some don’t. We work with lenders that support bridge financing.

How We Help

We coordinate the bridge with your mortgage, lawyer and REALTOR® so the timing works and the costs are clear up front. Book a call.

Frequently asked questions

How much does bridge financing cost?

Usually interest at roughly prime plus 2% to 4%, charged daily, plus a lender admin fee and some legal cost. A two week bridge on $100,000 typically costs a few hundred dollars in interest.

Do I need a firm sale for bridge financing?

Yes, almost always. Lenders want an unconditional sale agreement on your current home before they approve a bridge loan.

This article is general information, not personal financial advice. Rates, rules and programs change. Talk to a licensed mortgage broker about your situation. Lacroix Mortgage Group is licensed and powered by Mortgage Connection Inc.