What Is Bridge Financing in Canada? (2026 Guide)
Buying your next home before your current one sells? Bridge financing covers the gap. Here's how it works in Canada, what it costs, and how to qualify.
Buying your next home before your current one sells? Bridge financing covers the gap. Here's how it works in Canada, what it costs, and how to qualify.
The classic moving headache: you've bought your next home, but your current one closes a few days — or weeks — later. Where does the down payment come from in the meantime? Bridge financing solves exactly this, letting you use the equity you haven't received yet. Here's how it works in Canada.
The short answer
Bridge financing is a short-term loan that "bridges" the gap between buying your new home and the sale of your current one closing. It lets you access your existing home's equity for the down payment before the sale funds arrive, so you can close on the new place on time. It's secured against your sold home and repaid as soon as that sale completes. See bridge financing options.
When you need it
You need a bridge whenever your purchase closing date is before your sale closing date. Without it, your down payment is still locked in the home you're selling. With it, you borrow against that equity for the overlap period — commonly a few days to a few months — and repay it the moment your sale closes. Estimate the cost with the bridge loan calculator.
How it works
- You've firmly sold your current home (a firm sale agreement is usually required) and bought the next one.
- The lender advances the equity you'll receive from the sale, secured against that property.
- You close on the new home using those bridged funds for the down payment.
- Your sale closes and the proceeds repay the bridge automatically.
What it costs
Because it's short-term, a bridge loan charges interest (typically at a premium over prime) plus usually a modest administration fee. But the dollar cost is small precisely because the term is short — often just days or weeks of interest. The convenience of closing on time, avoiding a double move or temporary housing, usually far outweighs the cost.
How to qualify
- A firm sale on your existing home is normally required (a conditional sale may not qualify).
- Enough equity in the sold home to cover the bridged amount.
- Your new mortgage approved and in place.
Because lenders want a firm sale, bridge financing is cleanest when your sale is locked. If it isn't, a short-term private loan may be an alternative.
Bridge financing vs. other short-term options
A bridge is purpose-built for the buy-before-sell timing gap and is usually the cheapest, simplest fix. If your timeline or sale status doesn't fit a lender's bridge rules, private financing can fill the gap with more flexibility (at a higher cost). And if you're moving and keeping your mortgage, look at porting your mortgage too.
Frequently asked questions
What is bridge financing?
A short-term loan that covers the gap when your new home's purchase closes before your current home's sale, letting you use your existing equity for the down payment until the sale funds arrive.
How long does bridge financing last?
Typically from a few days to a few months — just long enough to cover the overlap between your purchase and sale closing dates.
How much does a bridge loan cost?
Interest at a premium over prime plus usually a small administration fee, but the total is modest because the term is so short. The bridge loan calculator estimates it.
Do I need a firm sale to get bridge financing?
Usually yes — lenders generally require a firm (unconditional) sale agreement on your current home. If your sale isn't firm, a private loan may be an alternative.
Closing dates not lining up? Talk to us or explore bridge financing — we'll arrange the gap funding so you close on your new home stress-free.
Mortgage content produced by Mortgage Squad Advisors' team of FSRA-licensed mortgage advisors and reviewed under the supervision of the brokerage's Principal Broker (FSRA Brokerage #13737) before publication.