Bridge Loans in Canada: How They Work and When to Use Them (2026)
Updated
A bridge loan solves the most stressful timing problem in real estate: you’ve found your new home, but your current property hasn’t closed yet and your equity is tied up. Instead of scrambling for cash or losing the deal, a bridge loan provides short-term financing (usually 30–90 days) secured against your existing property. The cost is surprisingly reasonable — typically $1,500–2,000 for a 30-day, $200,000 bridge — making it far cheaper than the alternatives of renting between sales, rushing to sell below market, or losing your dream home entirely. The critical requirement is a firm (unconditional) sale on your current property; without it, most lenders won’t approve.
How Bridge Loans Work
Feature
Details
Purpose
Fund new home purchase before existing sale closes
Amount
Usually the equity from your current home sale
Term
Typically 1 day to 6 months
Security
Your existing property
Requirement
Firm sale on existing home
When You Need a Bridge Loan
The Timing Problem
Scenario
Need Bridge Loan?
Selling first, then buying
Usually no
Buying and selling on same day
Usually no
Buying before sale closes
Yes
Sale falls through, already bought
May need alternative
Example Timeline
Date
Event
March 1
Firm sale on current home (closes May 15)
March 15
Buy new home (closes April 15)
Gap
30 days — need bridge loan
April 15
Bridge loan provides down payment
May 15
Sale closes, bridge loan repaid
Bridge Loan Costs
Interest Rates
Lender Type
Typical Rate
Major banks
Prime + 2-3%
Credit unions
Prime + 2-4%
Alternative lenders
Prime + 4-6%
Total Cost Example
Factor
Amount
Bridge amount
$200,000
Interest rate
Prime + 3% (assume 8.5% total)
Duration
30 days
Interest cost
~$1,400
Admin/setup fee
$200-500
Legal fees
Included in purchase closing
Total cost
~$1,600-1,900
Cost by Bridge Amount
Bridge Amount
30 Days
60 Days
90 Days
$100,000
~$800
~$1,500
~$2,200
$200,000
~$1,500
~$2,900
~$4,300
$300,000
~$2,200
~$4,300
~$6,500
At approximately 8.5% annual rate plus fees.
Eligibility Requirements
Typical Requirements
Requirement
Details
Firm sale agreement
Not conditional
Mortgage approval
For new property
Same lender
Usually (for convenience)
Maximum term
Often 90-120 days
Minimum bridge
Varies ($25,000+)
Documents Needed
Document
Purpose
Purchase agreement (new home)
Proves purchase
Sale agreement (current home)
Proves funds coming
Current mortgage statement
Outstanding balance
New mortgage approval
Proves financing
How to Apply
Process
Step
Action
1
Get mortgage approved for new home
2
Secure firm sale on current home
3
Request bridge loan from lender
4
Provide purchase and sale agreements
5
Lender calculates bridge amount
6
Sign bridge loan documents
7
Funds available at new home closing
Bridge Loan Calculation
Factor
Amount
Sale price of current home
$600,000
Minus mortgage owing
$300,000
Minus real estate commission (~5%)
$30,000
Minus legal/closing costs
$5,000
Net proceeds (bridge amount)
$265,000
Lender Options
Major Banks
Bank
Bridge Loans Available
TD
Yes
RBC
Yes
BMO
Yes
Scotiabank
Yes
CIBC
Yes
Alternative Options
Lender Type
When to Consider
Credit unions
May have flexibility
Mortgage brokers
Access multiple lenders
Private lenders
When bank won’t approve (higher cost)
What If Sale Falls Through?
Risks
Scenario
Consequence
Buyer backs out
May need to find new buyer quickly
Conditions not met
Sale doesn’t close
Bridge due
Must repay or convert to different loan
Mitigation
Strategy
Details
Firm sales only
No conditions = more certain
Backup plan
Line of credit, HELOC
Contingency clause
In purchase (risky for seller)
Alternatives to Bridge Loans
Bridge loans are the most straightforward solution, but they’re not the only option. If you can sell first and rent temporarily, you avoid bridge costs entirely — though two moves with a family is painful. Coordinating same-day closings eliminates the bridge need but requires precise timing. A HELOC on your current property set up in advance gives you the most flexibility: you can draw funds whenever needed, the rate is usually lower than a bridge loan, and you’re not dependent on closing date alignment. The best strategy depends on your market and your tolerance for complexity.
Sell First, Then Buy
Pros
Cons
No bridge needed
May need temporary housing
Know exact proceeds
Two moves
Less stressful
May miss ideal purchase
Same-Day Closing
Pros
Cons
No bridge needed
Coordinate two closings
One move
Risk if either delayed
Lower cost
Stressful
HELOC Before Selling
Pros
Cons
Access equity anytime
Set up in advance
Reusable
May affect mortgage qualification
Lower rate than bridge
Requires sufficient equity
Carry Two Properties Temporarily
Pros
Cons
Maximum flexibility
Must qualify for both mortgages
Time to sell
Expensive if slow sale
No bridge fees
Carrying costs add up
Bridge Loan vs HELOC
Factor
Bridge Loan
HELOC
Setup
Quick (days)
In advance
Rate
Prime + 2-4%
Prime + 0.5-2%
Term
Short (days-months)
Ongoing
Qualification
Need firm sale
Based on equity
Best for
Short gaps
Flexible access
Tax Implications
Consideration
Details
Interest deductible?
Generally no (personal residence)
If rental property
May be deductible
Moving expenses
Track separately (may be deductible)
Questions to Ask Your Lender
Question
Why It Matters
What is the interest rate?
Compare costs
Are there setup fees?
Full cost picture
What is the maximum term?
Plan for delays
What if sale is delayed?
Contingency options
Can I pay off early?
Flexibility
The Bottom Line
Bridge loans are a practical, affordable solution when your purchase closes before your sale. At $1,500–2,000 for a typical 30-day bridge, the cost is minor compared to the stress and expense of alternatives. Get your firm sale in place first, then ask your mortgage lender about bridge financing — most major banks offer it as part of the mortgage package.