A bridge loan solves one of the most stressful timing problems in real estate: your new home closes before the sale of your current one, and the equity you need for the down payment is still tied up in the old home. Bridge financing lends you that equity for the days or weeks in between, and the sale proceeds repay it. This page explains how a bridge loan works, what lenders require and what the alternatives are; to work out what one would cost you, use the bridge financing calculator. It is part of our guide to mortgage types and features.
How a Bridge Loan Works
The timing problem
Ideally you sell your current home and buy the new one on the same day. In practice, closing dates often don’t line up:
| Scenario | What happens | Bridge loan needed? |
|---|---|---|
| Purchase closes before sale | You need money for the new home, but your equity is in the old one | Yes: bridge financing covers the gap |
| Sale closes before purchase | You have the sale proceeds but may need somewhere to live for a while | No: temporary housing instead |
| Same-day closing | Everything happens at once | No |
| Sale falls through after you’ve bought | No proceeds are coming to repay a bridge | A bridge won’t help; see “If the sale falls through” below |
The flow of funds
Purchase closing day:
Bridge lender advances a short-term loan -> used to complete your purchase
Sale closing day:
Your buyer pays for your old home -> your lawyer uses the proceeds to repay the bridge loan
Net result: interest for the days in between, plus any fee
TD describes bridge loans as loans that use your current home's equity to cover some of the costs of your new home, like the down payment, and adds that the amount of your bridge loan will be reduced by an estimated amount for closing costs.
What the bridge loan covers
| Component | Where the money comes from |
|---|---|
| Down payment on the new home | Equity in the old home |
| Closing costs on the new home | Land transfer tax, legal fees, adjustments |
| Mortgage discharge on the old home | If your new mortgage doesn’t cover the old one |
The amount you can bridge is generally limited to the equity you will actually receive from the sale.
The Firm-Sale Requirement
Banks lend a bridge because the sale proceeds are certain to arrive. RBC states that to qualify, a firm sale agreement must be in place on your existing home. TD asks for sale and purchase agreements and approval for a TD Canada Trust Mortgage or TD Home Equity FlexLine on the new property.
| Requirement | Details |
|---|---|
| Firm sale agreement | An unconditional accepted offer on your existing home |
| Approved mortgage on the new home | The new mortgage must be approved and committed |
| Same lender | Banks usually offer bridge financing to their own mortgage customers |
| Length of the loan | Set by each lender: TD says typically a maximum of 90 days; RBC says typically six months but can range from 90 days to 12 months or longer |
| Credit | Standard lending criteria apply |
When a bank usually won’t provide bridge financing
| Situation | Why |
|---|---|
| Your old home isn’t sold yet | No confirmed proceeds to repay the bridge |
| The sale still has conditions (inspection, financing) | The sale isn’t firm, so the lender has no certainty |
| The gap is longer than the lender allows | Beyond its risk tolerance |
| Your new mortgage is with a different lender | Banks usually bridge only their own mortgage clients |
| The property is non-standard (vacant land, commercial) | Higher risk |
Bank vs Private Bridge Loans
When a bank won’t bridge (no firm sale, credit issues, a non-standard property), private lenders may, at a much higher cost.
| Factor | Bank or credit union bridge | Private bridge |
|---|---|---|
| Needs a firm sale? | Yes | No |
| Rate | TD says bridge loans have interest rates similar to open rate mortgages, which are often higher than the interest rate you may be used to paying with your current mortgage | Often 10-18% a year |
| Fees | An administration fee, if any | Lender fee (1-2% of the loan), broker fee (around 1%), appraisal and separate legal fees |
| Risk to you | Low: the firm sale repays the bridge | High: if the old home doesn’t sell, you carry two mortgages plus the bridge |
Without a firm sale, a private bridge only works out if the old home sells within the loan’s term; a slow sale means more interest and possibly a lower price.
What a Bridge Loan Costs
Bridge interest is charged by the day, so the cost depends on the amount, the rate and the number of days. One example:
| Detail | Amount |
|---|---|
| Current home sale price | $650,000 |
| Current mortgage balance | $350,000 |
| Equity available | $300,000 |
| New home purchase price | $750,000 |
| New mortgage approved | $600,000 |
| Cash needed at purchase closing | $150,000 down payment + $15,000 closing costs = $165,000 |
| Bridge amount | $165,000 |
| Bridge period | 14 days |
| Interest (hypothetical 8% a year) | $506 |
| Fee (example) | $500 |
| Total cost | $1,006 |
For a short gap with a firm sale, the cost is small next to the size of the transaction; a longer gap, a higher rate or a private lender’s fees raise it quickly. The bridge financing calculator works out the cost for your own amount, rate, days and fee, including the cost as an annual rate.
If the Sale Falls Through
The firm-sale requirement protects the lender, but a firm sale can still collapse. TD warns that if for some reason your sales agreement falls through on your current house, you may have to pay two mortgages until a new sale is finalized. RBC calls bridge loans a higher risk because you're taking on a new loan with typically a higher rate and no guarantee that your home will sell during the term.
| Scenario | Consequence |
|---|---|
| Buyer backs out | You need a new buyer while carrying both homes |
| The closing is delayed | Each extra day adds a day of interest, and the bridge may come due first |
| Bridge term ends before the sale closes | You repay it another way or arrange different financing |
A line of credit or HELOC set up before the sale, or savings set aside for carrying costs, gives you room if this happens.
Alternatives to Bridge Financing
| Alternative | How it works | Pros | Cons |
|---|---|---|---|
| Align closing dates | Negotiate the purchase and sale to close on the same day | No bridge, no cost | Needs both the buyer and the seller to agree; risky if either closing slips |
| Extended closing on the purchase | Ask the seller for a later closing date | Time to sell first | The seller may not agree, especially in a hot market |
| Sell first, rent temporarily | Sell, move to a rental, then buy | No bridge or timing risk | Moving twice, storage costs, rental market risk |
| HELOC on the existing home | Draw on a home equity line of credit, then repay from the sale | Flexible, often a lower rate than a bridge | Must be set up in advance and have enough room |
| Port your mortgage | Move your existing mortgage to the new property | Keeps your rate and avoids a penalty | Must qualify; timing limits apply |
| Conditional offer on the purchase | Make the purchase conditional on selling your home | Protects you financially | Sellers often reject conditional offers |
| Carry both properties | Hold two mortgages until the old home sells | Time to sell | Must qualify for both; carrying costs add up |
How a HELOC compares with other ways to borrow against a home is covered in mortgage vs home equity loan vs HELOC. Moving a mortgage to the next home is explained in how to port a mortgage; if the new home needs more, the added funds are usually blended with your existing rate.
Step-by-Step Bridge Financing Process
- Get your new mortgage approved, ideally before listing your current home or making an offer
- Sell your current home, aiming for a firm (unconditional) sale before the purchase closes
- Negotiate closing dates to align them or keep the gap short
- Apply for bridge financing, usually as part of the new mortgage application, with the purchase and sale agreements, your current mortgage statement and the new mortgage approval
- Your lawyer coordinates the bridge advance at the purchase closing and the repayment at the sale closing
- Purchase closes: the bridge funds complete your purchase
- Sale closes: the sale proceeds repay the bridge loan
- Bridge loan discharged: the balance is paid off and any remaining proceeds go to you
Warning Signs
| Warning sign | Why it is risky |
|---|---|
| A long gap between closings | Costs accumulate and complications become more likely |
| Your home isn’t selling | You may carry two mortgages plus bridge interest |
| You don’t qualify for a bank bridge | Private bridge costs can run to thousands of dollars |
| The bridge amount exceeds your equity | Lenders won’t approve, and you may be overextended |
| A slowing market and a high asking price | A price cut reduces the equity available to repay the bridge |
Bridge financing calculator
A bridge loan covers the gap when you close on your next home before the sale of your current home closes. It lets you use the equity in the home you are selling (for the down payment on the new one, for example) before the sale money arrives. This page has a calculator for the cost of that loan, followed by what two big banks say about how their bridge loans work. It is part of the refinancing and home equity guide; for other ways to borrow against a home you already own, see the HELOC calculator and the home equity calculator.
Bridge Financing Calculator
How the calculator works
- Interest: simple interest charged by the day, so interest = loan amount × annual rate ÷ 365 × number of days. Your lender’s agreement sets the exact method, so check it against the quote.
- Total cost: interest plus any fees the lender quotes (the fee field starts at $0 because banks don’t publish a standard bridge fee).
- Cost as an annual rate: total cost ÷ loan amount × 365 ÷ days, which shows how a flat fee raises the cost of a short loan.
- Equity check: sale price minus the mortgage owing and your selling costs. TD notes that the amount of your bridge loan will be reduced by an estimated amount for closing costs, so the calculator warns when the bridge amount is larger than that equity.
The rate field starts at the chartered-bank prime rate, 4.45% as of 2026-10-14 (Bank of Canada). That is a reference point, not a bridge-loan rate: TD says bridge loans have interest rates similar to open rate mortgages, which are often higher than the interest rate you may be used to paying with your current mortgage, so replace it with the rate your lender quotes. The days field starts at 60, from TD’s own example below; the amount, sale price and mortgage fields start at the figures in TD’s example too.
Bridge financing cost examples
These examples use a hypothetical rate of 7% a year and leave out fees. Each line is loan amount × 0.07 ÷ 365 × days.
| Bridge loan | Days | Interest per day | Interest for the period |
|---|---|---|---|
| $150,000 | 30 | $28.77 | $863.01 |
| $200,000 | 60 | $38.36 | $2,301.37 |
| $300,000 | 90 | $57.53 | $5,178.08 |
A fee changes the picture most on a short loan. A $500 fee on the $150,000, 30-day loan above brings the total to $1,363.01 ; enter the fee you are quoted in the calculator to see its effect on the annualized cost.
How bridge financing works
TD describes bridge loans as loans that use your current home's equity to cover some of the costs of your new home, like the down payment. Once your current home’s sale closes, the sale proceeds repay the bridge loan and its interest.
TD’s own example of the timing: your new home closes in 30 days and your current home in 90 days, so the bridge loan covers the 60 days in between .
TD’s example of the amount: if your current home is worth $300,000 and you owe $200,000 on it, you may be eligible for a $100,000 bridge loan , and TD adds that the amount of your bridge loan will be reduced by an estimated amount for closing costs.
What the banks ask for and how long the loan lasts
Lenders set their own terms. Here is what TD Canada Trust and RBC Royal Bank say on their bridge financing pages:
| Lender | How long the loan can last | What you need |
|---|---|---|
| TD Canada Trust | typically a maximum of 90 days | sale and purchase agreements and approval for a TD Canada Trust Mortgage or TD Home Equity FlexLine on the new property |
| RBC Royal Bank | typically six months but can range from 90 days to 12 months or longer | a firm sale agreement must be in place on your existing home |
As stated on each bank’s page on October 1, 2026 (TD, RBC).
TD says its mortgage specialists can explain the options if you need a larger loan or a bridge loan beyond 90 days. RBC notes that bridge loans can vary widely in terms, costs and conditions, so the rate, fee and length on your own quote are what count.
Working out how much you need to bridge
The amount to bridge is the cash you need on the new home’s closing day that you don’t yet have:
Bridge amount = down payment on the new home + closing costs − cash you already have
| Item | Amount |
|---|---|
| New home price | $800,000 |
| Down payment (20% of the price, chosen for this example) | $160,000 |
| Closing costs (example figure) | $20,000 |
| Total needed on closing day | $180,000 |
| Cash you already have | $30,000 |
| Amount to bridge | $150,000 |
Closing costs depend on the province and the price: the land transfer tax calculator and the closing cost calculator work out your own figures, and the down payment calculator shows the minimum for the new home.
Alternatives to a bridge loan
| Option | How it works | Trade-off |
|---|---|---|
| Line up the closing dates | Negotiate the purchase and sale to close on the same day | No bridge cost, but depends on the buyer and seller agreeing |
| Make your offer conditional on selling | The purchase only goes ahead once your home sells | No bridge cost, but a seller may prefer an offer without the condition |
| HELOC on your current home | Borrow against the home you are selling, then repay from the sale | A revolving HELOC has its own limit (below); see the HELOC calculator |
| Unsecured line of credit | Borrow without using the home as security | Limits and rates differ; see HELOC vs personal line of credit |
The HELOC limit: The revolving (non-amortizing) HELOC part can't exceed 65% of the home's value at a federally regulated lender.
Risks of bridge financing
- The sale falls through. TD warns that if for some reason your sales agreement falls through on your current house, you may have to pay two mortgages until a new sale is finalized.
- The term runs out before the sale closes. RBC calls bridge loans a higher risk because you're taking on a new loan with typically a higher rate and no guarantee that your home will sell during the term.
- The closing is delayed. Each extra day adds a day of interest; change the days in the calculator to see the cost of a delay.
Bridge financing checklist
Before applying:
- Get the sale agreement for your current home and the purchase agreement for the new one.
- Get approved for the mortgage on the new home.
- Work out the amount to bridge (formula above) and the number of days between the closings.
- Ask each lender for its rate, any fees and the longest term it allows, and enter them in the calculator.
At closing:
- Confirm the bridge funds are advanced on the new home’s closing date.
- When your current home’s sale closes, confirm the bridge loan is repaid from the proceeds and discharged.
Related Pages
- Bridge Financing Calculator
- How to Port a Mortgage
- Assumable Mortgages
- What to Expect on Closing Day
- What Are Closing Costs in Canada?
- Best Mortgage Lenders for First-Time Buyers
- Financing vacant land
- Qualifying while carrying two properties
- Property types in Canada
- Best Mortgage Brokers in Canada
- Monthly Carrying Costs of Owning a Home in Canada
- Mortgage Lenders and Brokers in Canada
- How Mortgage Penalties Are Calculated in Canada
- Canada Prime Rate
- Best Private Mortgage Lenders in Canada
Sources
The figures and rules on this page come from these sources, last checked against them between September 29, 2026 and October 19, 2026. How we check facts.
- Bank of Canada: Data table
- Bank of Canada: Interest rates posted for selected products by the major chartered banks
- Bank of Canada: Data table
- CMHC: CMHC Refinance for Building Secondary Suites
- Financial Consumer Agency of Canada: Home equity lines of credit
- Justice Laws (Canada): Bank Act
- Justice Laws (Canada): Eligible Mortgage Loan Regulations
- OSFI: Residential mortgage underwriting practices and procedures
- RBC: Bridge Financing - RBC Royal Bank
- TD: Bridge Financing | TD Canada Trust