Bridge financing lets you use the equity in your current home to close on a new purchase before your sale actually closes, provided you have a firm sale agreement in hand. Terms typically run a few weeks to a few months, occasionally longer, and the trade-off is straightforward: modest short-term interest and fees in exchange for the ability to secure a home without waiting on your sale.
TL;DR:
- Most lenders require a firm purchase agreement and proof of equity, with private lenders offering faster approval but at higher costs.
- Bridge loans typically cover 30 to 60 days, costing interest prorated daily, with total expenses depending on the loan amount and duration.
- Carrying two mortgages during the bridge period increases financial risk if your sale falls through or delays, so conservative sizing and a cash buffer are essential.
- Private lenders can fund a bridge in as little as five business days, while banks often need 10 to 15 days due to standard approval procedures.
- Alternatives like using an existing HELOC, adding sale conditions, or private short-term loans may suit some buyers but involve different costs and strategic trade-offs.
What is bridge financing in Ontario?
Bridge financing is a short-term loan that covers the gap between the purchase closing on your new home and the sale closing on your current one. It draws against the equity you have in the property you are selling, so you are not scrambling for a down payment while carrying two addresses. TD Canada Trust describes it as a tool that lets homeowners carry two mortgages for a short window, commonly up to 90 days, while proceeds from the sale are still in transit.
It is not the same as a HELOC, which you set up in advance against your home’s equity and can draw on repeatedly, or a private personal loan, which is not tied to a specific closing date. Bridge financing is purpose-built for one transaction, on a fixed timeline, and usually gets arranged through:
- Major banks, which offer the lowest rates but only if they hold your new mortgage
- Credit unions, which sit in the middle on cost and flexibility
- Private lenders, who move faster but charge more
How does bridge financing work, and how much can you borrow?
The sequence is fairly mechanical once your sale is firm. Here’s how it typically unfolds:
- You sign a firm agreement of purchase and sale on your current home
- Your lender or broker registers the bridge loan against that equity
- Your new purchase closes, funded partly by the bridge
- Your sale closes, and proceeds repay the bridge loan in full
Lenders calculate your available bridge amount by taking your sale price, subtracting your existing mortgage balance, estimated real estate commission, and closing costs, then advancing against what is left. A rough example: if your home is selling firm for $850,000, your remaining mortgage is $400,000, and commission plus closing costs run around $50,000, you are left with roughly $400,000 in accessible equity, before your lender applies its own margin. Actual figures vary by lender, property, and how tight your closing dates are.
What does bridge financing cost in Ontario?
Bridge loans are priced daily, not monthly, which matters because you are usually only carrying one for a few weeks. Costs generally break down into three pieces:
- Interest: banks tend to price bridge loans close to prime plus a small premium, while private lenders charge noticeably more for speed and flexibility
- Administration fees: often a flat setup charge, separate from interest
- Legal costs: your lawyer may need to register and later discharge the bridge, adding to your closing bill
Because bridge loans are prorated by the day, a short gap between closings often costs less than borrowers expect — brokers commonly use tools like the CMLS bridge loan calculator to prorate daily interest and estimate the total cost for a specific loan amount and term before committing. For a 30 to 60 day bridge on a moderate amount, total interest plus fees is usually a manageable sum relative to the purchase price, though your exact number depends on your rate, lender, and how long the bridge actually runs.
Is bridge financing worth it? Weighing the trade-offs
Bridging solves a real problem, but it is not free of risk. On the upside, it lets you make a firm, unconditional offer instead of one contingent on selling your current home first, which matters enormously in competitive Ontario markets where conditional offers routinely lose out. It also spares you the logistics of moving twice or timing a rental in between.
On the downside, you are carrying two mortgages simultaneously for however long the bridge runs, and if your sale falls through or closing gets delayed, you are exposed until it settles. Mortgage Capital Investment notes that a clear exit plan and conservative sizing, rather than bridging to the absolute limit of your equity, meaningfully reduce that exposure.
- Pro: secures a firm offer in a competitive market
- Pro: avoids the stress of a double move
- Con: two mortgage payments during the bridge period
- Con: real exposure if your sale collapses or delays
Pro Tip: Keep a small cash buffer beyond what the bridge covers. If your sale closes a week or two late, that buffer absorbs the extra interest without forcing you to scramble for funds.
What do lenders require to approve a bridge loan?
Most lenders in Ontario want to see the same core documents before they will approve a bridge, regardless of size:
- A firm, signed agreement of purchase and sale on the home you’re selling, with no conditions left outstanding
- Proof of the equity you’re relying on, typically your current mortgage statement and the sale price
- Recent income documentation and a credit check, similar to any mortgage application
- Confirmation of your new mortgage, since banks generally require they hold that mortgage to also provide the bridge
Banks are the strictest on this last point. Credit unions offer somewhat more flexibility, and private lenders will often work with you even if your new mortgage sits elsewhere, at a higher cost. RBC’s guidance confirms this pattern: banks tend to bundle bridge financing with the new mortgage rather than offer it as a standalone product.
What are the alternatives to bridge financing?
Bridge loans aren’t the only way to buy before you sell. Depending on your situation, one of these might fit better:
- Use an existing HELOC. If you already have a home equity line of credit set up on your current property, it can often fund your down payment without the setup costs of a new bridge loan, though it needs to be in place before you list.
- Add a financing or sale condition to your offer. Negotiating a longer closing date or a condition tied to your own sale avoids the need to bridge at all, though it weakens your offer in a competitive multiple-offer situation.
- Use a private short-term loan only when speed matters most. If your sale isn’t yet firm, a HELOC typically can’t be arranged mid-transaction, which leaves a private bridge as one of the only fast options, at a real cost premium.
How do you actually arrange bridge financing before closing?
Getting a bridge loan sorted is mostly about sequencing. Do this in order:
- Talk to a mortgage broker or your bank before you write a firm offer, not after, to confirm bridge financing is available and roughly what you’d qualify for.
- Gather your documents early: your current mortgage statement, proof of equity, income verification, and a copy of your listing or upcoming sale agreement.
- Expect different timelines by lender type. Private lenders can fund in as little as 5 to 7 business days, while banks often need 10 to 15 business days because of standard mortgage approval steps.
- Loop in your lawyer and realtor early so the bridge registration, your purchase closing, and your sale closing are all coordinated on paper, not just in conversation.
- Confirm your exit plan in writing, meaning you know exactly which sale proceeds repay the bridge and when.
Pro Tip: Run your numbers through a mortgage calculator before you commit to a closing date, so you know your carrying cost for every extra week the bridge might run.
What I tell my clients in Toronto and Innisfil about bridging
What I tell my clients before they even start touring homes is simple: talk to your mortgage broker before you write the offer, not after. In the Greater Toronto Area and around Friday Harbour, I’ve watched firm offers beat conditional ones on price alone, because sellers know a firm offer closes. A pre-confirmed bridge is often what makes that firm offer possible.
What most buyers don’t realize is how much of the stress comes from poor sequencing, not the loan itself. I’ve had clients in Innisfil who assumed their sale timing would just work out, then scrambled for financing with two weeks to close. It’s fixable, but it’s far less stressful when it’s planned. If you’re weighing a move into Friday Harbour or want a second look at your closing cost math before you commit, that’s exactly the kind of conversation I have with clients daily.
— Felix
Sources
- Bridge Financing | TD Canada Trust
- How bridge financing can help you buy first and sell later — RBC Royal Bank
- Bridge Loans in Ontario (2025 Guide) — Mortgage Capital Investment
- Bridge Loan Calculator — CMLS
FAQ
How hard is it to get bridge financing in Ontario?
It’s usually straightforward once you have a firm sale agreement, proof of equity, and your new mortgage lined up. The main hurdle for most buyers is timing paperwork, not qualifying.
How much would a $350,000 bridge loan cost?
Cost depends on your rate, lender, and how many days the bridge actually runs, since interest is prorated daily rather than charged monthly. A broker can run the exact figure through a bridge loan calculator once you know your term and rate.
What are the downsides of a bridge loan?
You’ll carry two mortgages at once for the term of the bridge, and if your sale is delayed or collapses, you’re exposed until it closes. Conservative sizing and a cash buffer reduce that risk considerably.
What are the alternatives to bridge financing in Canada?
An existing HELOC, a financing or sale condition in your purchase offer, or a private short-term loan are the three main substitutes, each with its own trade-offs on cost and offer strength. A HELOC works best when it’s already set up before you list your current home.
