In short
A bridge loan advances the down payment locked in your unsold home, for the overlap between purchase and sale — then repays itself in one shot at closing, out of the sale proceeds. Key condition at most lenders: a FIRM sale (accepted promise, conditions lifted). The cost: interest at prime + 2 to 3 points, plus setup fees. As an example, bridging $100,000 for 60 days at ~8% costs about $1,650 all in — the price of peace of mind between two addresses.
The mechanics: three dates, one bridge
The classic scenario: you sell your property and buy another — but your sale closes a few weeks after your purchase. Your down payment very much exists… inside a house that will only be paid at the end of the month. It all fits in three dates. Date 1: the closing of your purchase, at the lawyer's (or the notary's in Quebec) — the down payment is due that day. Date 2: the closing of your sale — the money arrives that day. The bridge covers the gap: the lender advances, as a short-term loan, the net equity of your current property (firm sale price, minus the mortgage balance to pay off, minus brokerage fees).
On date 2, the sale proceeds repay the bridge in one shot, interest included. No monthly payments: a few weeks of interest at prime plus about 2 to 3 points, setup fees — often between $250 and $500 — and it is settled. As an example: bridging $100,000 (the 20% down payment on a $500,000 home) for 60 days at 8% costs about $1,315 of interest — around $1,650 all in. The price of peace of mind between two addresses.
Interactive tool
The cost of your overlap, in 20 seconds
Enter the amount to bridge and the time between your two closings: the calculator returns the total cost, and per day.
Simple interest over the entered duration. For guidance only — rates and fees vary by lender; some require the new property's mortgage to be with them.
The condition everyone discovers too late: the firm sale
At most bank lenders, the bridge is only granted if your sale is firm: an accepted promise to purchase and conditions lifted — the buyer's financing confirmed, the inspection passed. The logic is simple: the lender advances money against a certain repayment, not against the hope of a sale. Concretely, that dictates the order of operations: ideally, you synchronize the promises so your sale becomes firm before lifting the conditions on your purchase. Without a firm sale, the classic bank bridge falls through — and you tip into alternative or private solutions, where rates climb fast.
An important reminder: the bridge covers the down payment, not the qualification — you must still qualify for the new mortgage, sometimes carrying both properties on paper for a few weeks. The bridged amount is also limited to your net equity: the bridge does not "create" capital, it moves it through time.
If the bridge does not go through: plan Bs, cheapest to priciest
Sell first, occupy later. Negotiating a late occupancy date with your buyer gives you time to purchase with peace of mind — the cheapest solution, when the buyer agrees. The offer conditional on your sale. Protective, but it weakens your offer in an active market — to be dosed with your real estate broker according to the balance of power. A HELOC, opened BEFORE selling. A line on your current property, set up while you are still its "stable" owner, can serve as a temporary down payment — it is planned months ahead. Short private financing. Without a firm sale, the last resort: markedly higher rates and fees — see Alternative lenders.
Choosing between bridge, HELOC and offer conditions, then synchronizing two closings and two financings: it is watchmaker's work — exactly what a good mortgage broker orchestrates with you before the dates are signed. For closing-day costs (land transfer tax, legal fees), see also Closing costs by province.
Frequently asked questions
What is a bridge loan (interim financing)?
A short-term loan that advances the down payment locked in your current property, so you can pay for the new one before collecting on the sale. It is repaid in one shot at closing (at the lawyer's, or the notary's in Quebec), out of the sale proceeds — typical duration from a few days to three months.
How much does a bridge loan cost?
Interest runs at prime plus about 2 to 3 points, plus setup fees often between $250 and $500. As an example, bridging $100,000 for 60 days at 8% costs about $1,315 of interest, i.e. around $1,650 all in.
Does my home need to be sold already to get a bridge?
At most bank lenders, yes: you need a FIRM sale — accepted promise to purchase with conditions lifted (financing, inspection). Without a firm sale, the classic bridge is refused; alternative or private solutions remain, clearly more expensive, to be framed carefully.
What are the alternatives to a bridge loan?
An offer conditional on selling your property (less competitive in an active market); selling first and negotiating a late occupancy date; a HELOC set up BEFORE selling; or, without a firm sale, short private financing — the most expensive plan B. The right choice depends on the market and your risk tolerance.
The bridge rates cited are orders of magnitude that vary by lender: confirm your case with a licensed professional.
Go further
Buying and selling at the same time?
Synchronizing two closings and two financings is planned before the dates are signed. Payotte verifies only one mortgage broker per sector, on facts — not on an advertising budget.
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