What is a bridge loan in Canada?

A bridge loan is short-term financing that "bridges" the gap between buying a new home and selling your current one. It provides funds for your new home''s down payment when your equity is tied up in your existing property.

How much does a bridge loan cost?

Bridge loans typically cost prime + 2-4% interest, plus setup fees of $200-500+. For a $200,000 bridge loan for 30 days at prime + 3%, expect ~$1,300-1,500 in interest plus fees. Total cost depends on amount and duration.

Can I get a bridge loan without selling my house first?

Generally no. Most lenders require a firm (unconditional) sale agreement on your current home to approve a bridge loan. Without a sale agreement, you''d need to qualify for carrying both mortgages, which is much harder.

Bridge Loans in Canada: How They Work and When to Use Them (2026)

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.