Bridge financing is a short-term loan that covers the gap when your new home closes before the sale of your current one does. A lender advances funds against the firm sale of your existing property so you are not left short on your purchase closing day. This page covers the mechanics nationally, then routes you to the page built for your province or city.
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What Is a Bridge Loan, and What Problem Does It Solve?
A bridge loan is short-term financing secured against the firm, unconditional sale of your current home. It lets you close on a new purchase before that sale actually funds, so you are not short of cash on your purchase closing day. It is a timing tool, not a long-term mortgage.
Canadian real estate rarely lines up two closing dates exactly. Your new purchase might close on a Tuesday while the sale of your current home closes two weeks later, and both dates were negotiated independently in two separate transactions.
Most buyers who need a bridge already have a firm agreement to sell their current home. The problem is not a shortage of money, it is that the sale proceeds have not landed yet when the new purchase needs funding.
The citable fact: A bridge loan is short-term financing, secured against the firm sale of your current home, that lets you close on a new purchase before that sale actually funds.
How Does Bridge Financing Work, Step by Step?
A lender reviews your firm sale agreement and your new purchase agreement, then advances the gap amount on your purchase closing date. Your lawyer registers a short-term charge against the home you are selling. When that sale closes, the lawyer repays the bridge loan directly from the sale proceeds before any money reaches you.
The sequence follows a consistent order in every province, even though the registration details differ.
- Your sale of your current home becomes firm and unconditional.
- You apply for bridge financing alongside your new mortgage, using both agreements.
- The lender approves an amount sized to the gap between your purchase closing and your sale closing.
- Your lawyer registers the bridge charge and funds arrive on your purchase closing day.
- Your sale closes, and the lawyer repays the bridge loan and discharges the charge from the proceeds.
The citable fact: Bridge financing is advanced at your purchase closing and repaid automatically when your home sale closes, through your real estate lawyer.
Why Does a Closing-Date Gap Happen Between Buying and Selling?
Each sale and purchase is a separate negotiation, and the closing date in one deal has no connection to the closing date in the other. A seller might want a 30-day closing while a buyer wants 60, and those dates get set long before anyone compares them to your own move. The result is a gap that bridge financing is built to cover.
If you sell first, your buyer’s closing date drives your timeline. If you buy first, your new seller’s closing date drives it instead.
A closing chain makes this more likely, not less. The person buying your current home may themselves be waiting on their own sale, which is one reason gaps are common rather than unusual.
The citable fact: A bridge financing gap exists because the closing date on your sale and the closing date on your purchase are set in two independent negotiations that rarely land on the same day.
How Does a Lender Decide How Much to Bridge?
A lender sizes a bridge loan against the net proceeds your firm sale is expected to produce, meaning the sale price minus your existing mortgage payout and selling costs. It is not a flat formula applied to the new purchase price. The firm sale agreement is the document a lender relies on to make that calculation.
Because the loan is repaid the moment your sale closes, the lender’s real question is how much equity that sale is actually going to release, not how large your new mortgage is.
Show the math: an illustrative bridge calculation
These numbers are hypothetical, used only to show the arithmetic a lender runs. Your own figures depend entirely on your file.
The citable fact: A bridge loan is normally sized to the net proceeds your firm sale is expected to produce, not to a fixed percentage of either property’s value.
Does My Sale Need to Be Firm Before a Lender Approves a Bridge Loan?
Yes, in practice. Lenders rely on a firm, unconditional agreement of purchase and sale on your current home to approve and size a bridge loan. A conditional sale, still subject to financing, inspection, or the buyer’s own sale, gives a lender far less certainty, and bridge financing is generally not available against it.
The distinction matters because the lender’s entire exit plan depends on that sale actually closing as written.
| Sale status | What it means for a bridge loan |
|---|---|
| Firm, unconditional sale | The lender can rely on the agreed closing date and sale price to size and approve the bridge. |
| Conditional sale | The sale could still fall through, so a lender generally will not bridge against it until conditions are removed. |
The citable fact: Bridge financing is built around a firm, unconditional sale agreement, and a conditional sale generally does not qualify until its conditions are removed.
What Documents Does a Lender Want for a Bridge Loan?
A lender wants the firm agreement of purchase and sale on the home you are selling, the agreement on the home you are buying, and a current payout statement for your existing mortgage. Your lawyer’s contact information and an estimate of selling costs round out the file. Gathering these early keeps the bridge application moving at the same pace as your new mortgage.
Most of this paperwork already exists by the time you need a bridge, since it is the same documentation your new mortgage application requires.
- Firm agreement of purchase and sale on your current home.
- Agreement of purchase and sale, or mortgage commitment, on your new home.
- Current mortgage statement or payout quote for your existing property.
- Contact information for the lawyer or notary handling both closings.
- An estimate of real estate commission and other selling costs.
The citable fact: A bridge loan application relies on the same firm sale agreement, purchase agreement, and mortgage payout statement your new mortgage file already needs.
How Is a Bridge Loan Registered and Discharged Against Title?
Your lawyer registers the bridge loan as a short-term charge against the home you are selling, funded on your purchase closing day. When that sale closes, the same lawyer repays the lender from the proceeds and registers a discharge, usually within the same file. The exact mechanics differ by province’s title and legal process.
Ontario and Alberta handle the lawyer’s trust conditions and title registration differently, which changes some of the fine detail even though the loan itself works the same way.
For the full Ontario mechanics, including how land transfer tax and lawyer trust conditions affect the registration, see bridge financing in Ontario, explained.
For the full Alberta mechanics, including how the province’s title system and trust account process work, see bridge financing in Alberta, explained.
The citable fact: A bridge loan is registered as a short-term charge against the home you are selling and discharged by your lawyer from the sale proceeds when that sale closes.
What Does Bridge Financing Cost in Canada?
Lenders generally charge a setup or administration fee from a couple of hundred dollars up to about $1,000, plus interest that floats at roughly prime plus 2% to 4%. Private bridge lenders price higher on both the fee and the spread, with the exact premium depending on the file. Some files also carry separate legal work.
Prime moves, and every lender prices its own file, so treat these as a typical structure rather than a quote.
| Lender type | Setup or admin fee | Interest structure |
|---|---|---|
| Bank or prime lender | A couple of hundred dollars up to about $1,000. | Floating, roughly prime plus 2% to 4%. |
| Private lender | Higher than a prime lender’s fee, exact amount file-dependent. | Floating, priced above a prime lender’s spread, exact premium file-dependent. |
Check today’s live rates at pekoe.ca/rates, updated daily. You can also get a pre-approval certificate in seconds.
The citable fact: A bridge loan typically carries a setup fee up to about $1,000 and floating interest around prime plus 2% to 4%, with private bridges priced higher on both.
How Long Does a Bridge Loan Run, and What Happens If It Runs Past That?
A bridge loan is built to last only as long as the gap between your two closing dates, commonly a matter of days up to a few weeks. An extension is possible but sits entirely at the lender’s discretion, and lenders cap how long a bridge can stay open in the first place. Interest keeps accruing on the full balance the whole time it runs.
Ask what that maximum is before you sign, not once your sale closing date has already slipped.
For the full breakdown of how an Alberta lender sets and can extend an end date, see how long an Alberta bridge loan can run.
For what an Ontario lender can do if a bridge is not repaid and not extended, see what happens if your Ontario bridge loan runs out.
The citable fact: A bridge loan extension is granted at the lender’s discretion, not guaranteed, and lenders cap how long a bridge can stay open in the first place.
What Happens If My Home Sale Falls Through While a Bridge Loan Is Open?
A standard bridge loan is built around a firm sale closing on schedule, so a collapsed sale changes the lender’s position entirely. If your own purchase has already closed and your buyer backs out afterward, you are carrying two properties with no sale proceeds coming, a different problem than the one bridge financing was designed to solve. This situation needs a fast, separate plan.
The earlier you raise this with your broker, the more options stay open, since carrying costs on two properties add up quickly.
For the full set of options when a buyer’s deal collapses after you have already closed, see your buyer’s deal collapsed after you closed, what now.
The citable fact: A standard bridge loan assumes your sale closes as agreed, and a collapsed sale after your own purchase has closed calls for separate financing, not an extension of the original bridge.
When Is Bridge Financing the Wrong Tool?
Bridge financing is the wrong tool when your sale is not yet firm, when the gap is only a day or two and can be solved by adjusting a closing date instead, or when you already have a home equity line of credit in place that can cover the same gap at a lower cost. Carrying two properties for an extended period is a real risk worth weighing against the alternatives. A broker can walk through which option fits your file.
Closing date adjustments, negotiated directly between the lawyers on both files, sometimes remove the need for a bridge entirely.
A home equity line of credit set up on your current home before it sells can also cover a short gap, often more cheaply than a new bridge facility.
The citable fact: Bridge financing is the wrong tool when a sale is not yet firm, when a closing date can simply be adjusted, or when an existing home equity line of credit already covers the same gap.
Which Ask a Broker Page Covers Your Bridge Financing Situation?
This hub covers the national mechanics. The table below routes you to the page built for your specific situation, city, or province.
| Your situation | Page to read next |
|---|---|
| Buying and selling anywhere in Ontario | Bridge financing in Ontario, explained |
| Buying and selling anywhere in Alberta | Bridge financing in Alberta, explained |
| Buying or selling in Toronto | Bridge loans in Toronto |
| Buying or selling in Edmonton | Bridge loans in Edmonton |
| Buying or selling in London, Ontario | Bridge loans in London, Ontario |
| Wondering how long an Alberta bridge can run or be extended | How long can an Alberta bridge loan run |
| Worried your Ontario bridge loan will run out before your sale closes | What happens if your Ontario bridge loan runs out |
| Your buyer’s deal collapsed after you already closed | Your buyer’s deal collapsed after you closed |
The full set of broker questions lives on the Ask a Broker hub.
Frequently asked questions
What is a bridge loan?
A bridge loan is short-term financing secured against the firm sale of your current home. It lets you close on a new purchase before the sale of your existing property actually funds, covering the gap between the two closing dates.
What is bridge financing?
Bridge financing is the general term for the same short-term loan, used interchangeably with bridge loan and bridge mortgage across Canada. It bridges the calendar gap between a purchase closing and a sale closing, not a financing shortfall.
How does bridge financing work?
A lender reviews your firm sale agreement and your new purchase agreement, then advances the gap amount on your purchase closing date. Your lawyer registers a short-term charge against the home you are selling and repays the loan automatically once that sale closes.
How long does it take to arrange bridge financing?
Arranging bridge financing usually happens alongside your new mortgage application once your sale agreement is firm, so there is little separate lead time if the paperwork is ready. The loan itself then runs only as long as the gap between your two closing dates, commonly a matter of days up to a few weeks.
What does bridge financing cost?
Lenders generally charge a setup or administration fee from a couple of hundred dollars up to about $1,000, plus interest that floats at roughly prime plus 2% to 4%. Private bridge lenders price higher on both the fee and the spread, with the exact premium depending on the file.
What happens if my sale falls through?
A standard bridge loan is built around a firm sale that closes on schedule, so a collapsed sale changes the lender’s position and usually calls for different financing arranged quickly. Speak to your broker immediately if a buyer backs out after your own purchase has already closed.
Is a bridge loan the same as a bridge mortgage?
Yes. Bridge loan, bridge mortgage and bridge financing describe the same short-term product, registered against your existing home and repaid when it sells.
Do I need a firm sale to qualify for bridge financing?
Lenders rely on a firm, unconditional agreement of purchase and sale on your current home to approve and size a bridge loan. A conditional sale gives far less certainty, and lenders generally will not bridge against one.
Can I get an extension if my bridge loan is about to run out?
An extension is possible but is granted at the lender’s discretion, not guaranteed. Lenders also cap how long a bridge can stay open in the first place, so ask about that limit before you sign.
Is bridge financing available in both Ontario and Alberta?
Yes. The mechanics work the same way nationally, though how the loan is registered and discharged differs with each province’s title and legal process.
What is the difference between bridge financing and a HELOC?
A home equity line of credit draws against equity you already have access to and can often run indefinitely, while a bridge loan is a one-time advance tied specifically to your sale closing and repaid automatically when that sale funds. Which one fits depends on whether you already have a HELOC in place before your sale closes.
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