Bridge Financing, Explained: The Loan Between Your Two Closings

What bridge financing actually is

Bridge financing exists for one specific, common problem: your purchase and your sale are two separate contracts with two separate closing dates, and those dates don't always line up. When your new home closes before your old one sells, bridge financing covers the gap — short-term money secured against the equity you already have coming from your sale, advanced a few weeks early.

It's a small, specific tool for a timing problem, not a way to stretch what you can afford. It exists to get you from one closing to the next without needing to be homeless in between or move your belongings twice.

How it's priced and calculated

According to Ratehub.ca, bridge financing is usually priced close to an open mortgage — commonly around prime plus two percentage points — alongside a flat administration fee to set it up, typically between $200 and $500. That's meaningfully different from a standard mortgage term: it's simple interest, calculated per day on the amount actually advanced, not compounded.

The loan amount itself follows a straightforward formula: your purchase price, minus your deposit already paid and the new mortgage amount you're taking on, equals the bridge amount — the piece your existing home's equity has to cover until it closes. A lender will also want to see that repaying the bridge still leaves equity behind once your sale completes; if it wouldn't, that's a sign the numbers need a second look before anyone signs anything.

Working through an example makes the mechanics concrete. Say your new home closes three weeks before your current one, and you need $150,000 bridged in the meantime. At prime plus two percentage points, priced as simple interest, the daily cost is the bridge amount multiplied by that pricing and divided by 365 — then multiplied by the number of days in the gap, plus the lender's flat setup fee. Shortening the gap by even a week or two, where the two closing dates allow it, has a direct and calculable effect on the total. That's the kind of number worth asking a broker to run before you're locked into specific dates, not after.

What a lender needs before approving one

The one requirement that matters most: a firm, condition-free sale agreement on the home you're leaving, with the waiver documented. Ratehub.ca is blunt about this — a lender will not provide bridge financing without it. A listing, a conditional offer, or "we expect to sell soon" isn't security a lender can lend against.

• Your purchase and sale closing dates, both fixed.
• A copy of the firm sale agreement on your current home, with all conditions waived and the waiver on file.
• The purchase agreement on your new home.
• A current mortgage statement showing what you still owe on the home you're selling.

Maximums vary by lender, but a gap of around 90 days is generally routine, with some lenders willing to stretch to about 120 days for the right file. A longer gap than that narrows your choice of lender considerably, and some situations may need a case-by-case conversation rather than a standard approval.

Most lenders won't register a lien against your property for a shorter, smaller bridge — it's simply repaid in full the moment your sale closes, through your lawyer's office as part of that closing. A larger or longer bridge is more likely to involve registering something on title, which brings its own legal costs into the total. Your lawyer, not your lender, is usually the one handling the actual repayment mechanics on closing day, which is one more reason to loop them in early rather than treating the bridge as a separate conversation from the rest of the transaction.

What bridge financing is not

It's not extra borrowing capacity. You still need to qualify for your new mortgage in full, stress test included, exactly as if bridge financing didn't exist — the bridge only covers the timing gap on money you already have coming from your sale, not additional room to buy more house.

When you're likely to need one — and when you won't

You're most likely to need bridge financing when your purchase closing lands before your sale closing — a common outcome in a competitive market, or simply a matter of how two unrelated closing dates happen to fall. If your sale closes first, or the two dates line up, there's often nothing to bridge at all.

Bridge financing and porting your existing mortgage are frequently used together when buying before selling: porting carries your current mortgage's contract pricing and remaining term over to the new property, while the bridge covers the short gap in between. They solve different problems and often show up in the same transaction — our guide to porting walks through when that combination works and when it doesn't.

None of this needs to be figured out alone or after the fact. Once your sale is firm and both closing dates are set, the numbers here are knowable in advance — worth confirming with a broker before you're relying on an estimate under time pressure.