Bridge Financing
Smoothing the Transition Between Homes
When Closing Dates Don’t Line Up, We Help You Stay on Track
Selling one home and buying another? If the dates don’t line up perfectly, bridge financing can help you temporarily cover the gap—so you can close on your new home without having to wait on the funds from your old one.
At Better Mortgages, we make this often-overlooked process simple, seamless, and stress-free.
What Is Bridge Financing?
Bridge financing is a short-term loan that gives you access to the equity in your current home before it officially sells. This allows you to use that equity as a down payment on your new purchase—even if your sale hasn’t closed yet.
It’s not uncommon for buyers to “own” two properties for a brief period while one is being sold and the other purchased. A bridge loan makes that temporary overlap financially possible without needing to liquidate other assets or pull together additional funds.
How It Works — Step by Step
Here’s how the bridge financing process typically unfolds:
- Your mortgage advisor identifies the need
We’ll review your closing dates and overall strategy to see if bridge financing is necessary. - You apply alongside your new mortgage
If needed, we’ll structure your application to include a bridge loan. Not every lender offers this option, so we’ll make sure you’re paired with one that does. - The loan is secured against your current home’s equity
Your existing property must be sold firm (with no conditions remaining), and your new home purchase must also be confirmed. - Funds are advanced just before closing on the new home
The loan is not deposited to you personally—your lawyer and the lender coordinate to ensure the funds go where they need to. - Repayment happens when your existing home closes
Once your current property sells and funds are received, the bridge loan is paid back—along with any accrued interest—before the new mortgage fully kicks in.
Why Homebuyers Use Bridge Financing
Closing date mismatch
Your home purchase closes before your sale.
Extra time to move
You want a few days or weeks to make the move without pressure.
Market opportunity
You find your dream home before your current one sells, and don’t want to miss out.
We work with many clients who use bridge financing—often without even realizing it. That’s because when handled properly,
it’s a behind-the-scenes solution that just works.
What Does It Cost?
Bridge loans are short-term and higher-risk for the lender, so they do carry higher costs. Typical terms include:
Interest rate:
Bridge loan fee:
Legal/admin costs:
Usually Prime + 3% to 5%
One-time fee (varies by lender)
May include extra legal work or title adjustments
Interest rate:
Usually Prime + 3% to 5%
Bridge loan fee:
One-time fee (varies by lender)
Legal/admin costs:
May include extra legal work or title adjustments
You don’t make monthly payments on the bridge loan itself. The interest and fees are paid from the proceeds of your home sale
—as part of closing.
While the interest rate is higher than a standard mortgage, the short duration (often just days or weeks) keeps total costs relatively low.
What Are the Risks?
Bridge financing is a powerful tool—but it’s important to understand where the risks may lie:
Home sale delays or collapses
If your current sale falls through, you may be stuck holding two mortgages and a bridge loan.
Default
If you miss payments on your existing mortgage during this time, lenders may take action to recover the bridge loan.
Interest accumulation
If the bridge period extends unexpectedly, costs can grow.
That’s why we always ensure you’re in the right position—and with the right lender—before setting anything in motion.
Example: How Much Can You Borrow?
Let’s say:
- Your current home is worth $600,000
- Your outstanding mortgage balance is $350,000
- You have roughly $250,000 in equity
A lender may offer up to 90% of your net equity, minus an allowance for closing costs. In this case, you could potentially access $200,000–$220,000 as a bridge loan toward your new down payment.
Final approval depends on:
- A firm sale agreement on your existing property
- The purchase details of your new home
- Appraisal results and qualifying criteria
Do I Always Need Bridge Financing?
Not always. If your home sale closes before your purchase, you’ll already have the funds ready—no bridge loan needed.
But if your purchase comes first (or if you want more flexibility to plan your move), a bridge loan is often the best solution.
Get Guidance You Can Trust
At Better Mortgages, we don’t just process bridge loans—we walk you through every step, explain your numbers, and make sure your transition between homes is a smooth one.
You’ll benefit from:
- Access to lenders that offer bridge financing
- Custom mortgage strategies for your timeline and budget
- Clear explanations so you’re never caught off guard
Whether you’re upgrading, downsizing, or relocating, we’ll help you bridge the gap—confidently.
Talk to a Mortgage Expert Today
We’re here to make the complicated feel simple. Reach out to a Better Mortgages specialist to discuss your move, get a pre-approval, and see if bridge financing is right for you. You can contact us by phone, email, live chat, or schedule an appointment.
Wherever you are in Canada—we’ll meet you there.