Other Services
Bridge financing
Your purchase closes on the 15th. Your sale closes on the 30th. Your down payment is sitting in the equity of a house you haven’t been paid for yet. Bridge financing covers those fifteen days so the timing mismatch doesn’t cost you the home you just bought.
What this covers
Covers the gap between your purchase and sale closings
Interest charged only for the days you actually use it
Repaid in full out of your sale proceeds
Why the gap happens at all
In Ontario it is common for a purchase and a sale to close on different days. Sellers want a date that suits their own move, buyers want possession, and the two rarely line up. The problem is that the money for your down payment is locked in your current home until its sale actually completes — and your new lender needs that down payment on closing day, not two weeks later.
How it works
Bridge financing is a short-term loan secured against your current home, arranged alongside your new mortgage and registered by your lawyer. It is advanced on your purchase closing day so your lawyer can complete the deal, then repaid in full from the sale proceeds when your sale closes. Terms are usually measured in days or weeks, sometimes a couple of months.
You almost always need a firm sale
This is the part that catches people. Most lenders will only bridge against a home that is firmly sold — agreement signed, all conditions waived. If your current home is still listed, or the sale is conditional on the buyer’s financing or inspection, bridge financing is generally not available yet and we need a different plan. Tell me your situation before you commit to a purchase date.
What it costs
Expect interest at a premium over prime, charged only on the days the money is outstanding, plus a lender administration fee and an additional legal cost for registering it. Because the term is so short, the total dollar cost is often much smaller than people brace for — and usually far cheaper than the alternatives, like a rushed price cut on your sale or a hotel and a storage unit for a month.
When it is the wrong tool
If your sale is not firm, if the gap runs to several months, or if the real problem is that you cannot carry both properties, bridge financing is not the answer and I will say so. In those cases we look at closing-date negotiation, a longer close on the purchase, or whether the purchase should wait.
Bring me your dates early
Bridge financing is arranged as part of your new mortgage, not bolted on the week of closing. The moment you know your two closing dates — even roughly — send them to me. It takes one conversation to confirm whether a bridge is available and what it will cost, and that conversation is much easier before you have signed anything.