A homeowner in Burlington closes on her new house on a Friday. Her old house doesn't close for another 46 days. The down payment she planned to use is still locked inside a property she technically still owns.
Bridge financing is a short-term loan secured against the equity in the home you're selling, used to fund your new purchase until the sale proceeds arrive. Your lawyer draws the money on closing day and repays the lender once your sale completes. Bank bridges usually run up to 90 days. Private bridges commonly run six to twelve months.
One condition decides which door you walk through: whether your sale is firm. This guide covers what a bridge costs, why banks refuse a conditional sale, what a private bridge through an alternative lender looks like instead, and the four things to line up before you sign an offer.
What bridge financing actually covers
The loan is sized to the gap, not to your purchase price. If your new home needs $150,000 down and you already paid a $25,000 deposit with the offer, the bridge covers the remaining $125,000, provided your current home holds that much equity once the existing mortgage is paid out.
The paperwork happens at your lawyer's office. The lender registers a charge against the home you're selling, you sign a direction committing the sale proceeds to repay the loan, and the funds are wired into your purchase on closing day. When your sale finally closes, your existing mortgage is paid out first, the bridge is repaid next, and whatever's left comes to you.
What a bridge does not do
A bridge doesn't qualify you for the new mortgage. That's a separate approval with its own income and debt service test, and it has to be in place before anyone discusses bridging. A bridge also won't rescue a purchase you can't carry once both properties settle. It solves a timing problem, and only a timing problem.
Interest on a bank bridge is usually tied to prime, which tracks the Bank of Canada policy rate and gets charged for every day the loan is outstanding. Your closing gap is the real cost driver. Stretch the gap, stretch the bill.
Why banks say no when your sale is still conditional
Almost every bank and credit union requires a firm, unconditional sale on your current home before approving a bridge. A signed offer isn't enough. If your buyer still has a financing condition, a home inspection condition, or a condition on selling their own property, the sale can fall apart, and the lender has no dated proceeds to point at for repayment.
Federally regulated lenders underwrite residential mortgages under the OSFI B-20 guideline, and most layer an internal rule on top of it: no firm sale, no bridge. That rule protects the lender's balance sheet. It does nothing for the seller who found the right house six weeks early.
Where this leaves real buyers
Two situations come up again and again. The first is a move-up buyer who goes firm on a new home while their own listing is barely a week old. The second is a self-employed owner whose income documents already make bank approvals slow, staring at a closing date that won't wait for a committee.
Private and alternative lenders come at it from the equity side. They look at the value of both properties, the size of the charge they would register, and whether your listing is priced to actually sell. A conditional sale, or no sale yet at all, isn't automatically fatal. Honestly, if you hold real equity in a listed, properly priced home, a buyer's outstanding condition shouldn't be the thing that costs you the house you want.
The trade is cost and term. You pay more for a private bridge, and you buy yourself time to sell.
What bridge financing costs in Canada
Bridge interest is charged daily on the amount you actually draw, not monthly on a full year. Bank bridges are priced off prime with a spread on top. Private bridges are priced against the equity and the risk in the file. Neither gets quoted the way a five-year mortgage does, so ask for the number that matters: the per diem in dollars, for your exact bridge amount.
Then add the fixed costs. Most lenders charge a set-up or administration fee. Your lawyer bills extra for registering and later discharging the additional charge. A private lender will usually want a current appraisal. On a short bridge, those fixed costs often add up to more than the interest, which catches out anyone who only compared rates.
| What to compare | Bank bridge | Private bridge | HELOC on your current home |
|---|---|---|---|
| Firm sale required | Almost always | Often not | No |
| Typical term | Up to 90 days | Six to twelve months | Open ended |
| How you pay | Daily interest, repaid from sale proceeds | Daily interest plus lender fees, repaid at payout | Monthly interest while it's drawn |
| Set-up cost | Admin fee plus legal | Lender fee, legal, usually an appraisal | Legal and appraisal if newly registered |
| Best when | Your sale is firm and the gap is short | Your sale is conditional, slow, or not yet made | You planned months ahead and it's already in place |
The Financial Consumer Agency of Canada publishes plain-language guidance on comparing the full cost of credit, and a bridge is exactly where that habit pays off. Ask one question before you sign: what happens if my sale closes 20 days late? The answer is either a per diem you can budget for or an extension fee nobody mentioned.
If you want to see how a file gets assessed before committing to anything, our application process lays out the documents and timelines involved.
The 4-point bridge readiness check
Run this before you sign an offer, not after. Every item is something a lender will ask for, and each one takes longer to produce than people expect.
1. Both closing dates, in writing
Not "sometime in June". The lender sizes the loan by counting days between the two closings, so a rough estimate turns into a wrong quote and a short approval.
2. Your net proceeds, not your sale price
Subtract the mortgage payout, any discharge penalty, real estate commission, and the tax adjustments on the statement. What's left is the equity a bridge lender can actually reach.
3. The status of your conditions
Know the exact date your buyer's conditions come off. If they haven't come off yet, say so at the start. A private lender can work with a conditional sale. Nobody can work with a surprise on closing week.
4. What happens if the sale slips
Ask about extension terms before you need them. On a private bridge that usually means a longer term or a switch to a short-term second mortgage, which is worth pricing early. Borrowers who plan the payout in advance land better terms, the same principle behind a proper private mortgage exit strategy.
What actually goes wrong
The failure is rarely the bridge itself. It's the sale. A buyer's lender appraises low and the deal gets renegotiated. A closing gets pushed two weeks because a title issue surfaces. The listing sits, the price comes down, and the equity you counted on shrinks by five figures. Build a buffer into the term you ask for, and price the extra days before you need them. And if payments start falling behind while the house sits, that turns into a different problem with a much shorter fuse.
Solid Capital is a Canadian alternative lender working with homeowners and business owners the big banks decline or slow-walk. We read the full file, including your equity, your listing, and your closing dates, instead of stopping at a credit score, and a Canadian advisor reviews every application personally. If your dates don't line up, start an application at solidcapital.ca. It takes about five minutes, and there's no impact to your credit to apply.
A bridge is a tool for a gap, not a fix for a problem. Get the dates, get the net proceeds, get the per diem in writing. Then sign.
Frequently Asked Questions
Can you get bridge financing in Canada without a firm sale?
Not from most banks. Federally regulated lenders almost always require an unconditional sale agreement on your current home before approving a bridge. Private and alternative lenders can often work from the equity in the property instead, which is where homeowners with conditional sales usually end up.
How long does bridge financing last in Canada?
Bank bridges typically run up to 90 days and are repaid the day your sale closes. Private bridges commonly run six to twelve months, which gives you room if the home takes longer to sell than expected. Ask about extension terms before you sign rather than after.
How is a bridge loan repaid?
From your sale proceeds. Your lawyer holds a signed direction committing the money, so when your current home closes, the existing mortgage is paid out first, the bridge is repaid next, and the balance is released to you.
How much does bridge financing cost?
Interest is charged daily on the amount drawn, plus a lender set-up fee, extra legal fees for registering and discharging the charge, and an appraisal on most private files. On a short bridge the fixed costs often exceed the interest, so ask for the total in dollars instead of comparing rates alone.
Does applying for bridge financing affect your credit score?
Applying with Solid Capital has no impact on your credit because the first review is a soft check. Other lenders may run a hard inquiry, which can lower a score slightly, so ask which type of check a lender performs before you apply.
What happens if your home doesn't sell before the bridge ends?
You either extend the bridge or move it onto another short-term product secured against the property, usually a second mortgage. Both cost money and both are easier to arrange before the term expires, so raise a slow listing with your lender early.
Can self-employed homeowners get bridge financing?
Yes. Bridge approval rests mainly on the equity in the home you are selling and the strength of the sale, not on two years of T4 income. Self-employed owners who struggle with bank mortgage approvals often find an alternative bridge easier to arrange, provided the equity is there.
