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Your new home closes on the 12th. Your old one closes on the 3rd of the following month. The money you are buying with is locked inside a house you have already sold but not yet handed over. Bridge financing covers those three weeks — and the arithmetic behind it is more knowable than most people are led to believe.
Stephen Green, Mortgage BrokerWaterloo Region · serving all of Ontario
Nearly 30 years in Canadian financial services
General information, not an offer of credit. Bridge financing is subject to lender approval, a firm sale, full qualification on the new mortgage and your solicitor’s review. Figures on this page are illustrative.
A short-term advance, secured against a sale that is already firm, that puts the equity in your hands a few weeks before the sale itself completes.
Money for the days between two closings. It exists because your purchase and your sale are separate contracts with separate dates, and those dates rarely land together.
Not a mortgage, and not extra borrowing capacity. It does not help you afford more house. You still qualify for the new mortgage in full, stress test included.
A firm sale on the home you are leaving — conditions waived, the waiver on file. That is the security. Without it, most lenders will not write one.
An accepted offer on the home you are leaving, with every condition waived and the waiver document on file. Until this happens there is nothing for a lender to bridge against.
The purchase date and the sale date. The number of calendar days between them is one of only three inputs that decide what the bridge costs.
Everything you need on the purchase closing day, less everything you already have available that day. What remains is the bridge. The worked example below runs this in full.
The new mortgage advances, the bridge advances alongside it, and your lawyer completes the purchase. You get the keys without the sale having completed.
The proceeds arrive at your lawyer, the bridge is repaid in full out of them, and what is left over is yours. You pay interest only for the days the money was actually out.
Three calculations, in this order. None of them are complicated — but all three have a line in them that people routinely leave out, and leaving one out is how a bridge comes back thousands of dollars larger than expected.
Not the sale price. The sale price is what a stranger pays; the net is what reaches your lawyer’s trust account. This figure is the ceiling on what any lender will bridge.
Commission attracts 13% HST in Ontario, and that HST is a real number — on a mid-priced Waterloo Region sale it is comfortably four figures on its own. If a prepayment charge applies because you are breaking rather than porting, it comes out here too.
Everything due on the purchase closing date, less everything you can already put your hands on that day.
Note the two additions. Land transfer tax and your lawyer’s account are due the same day as the purchase, so they are part of what has to be funded. This is the line almost everyone forgets, and on a $950,000 Ontario purchase it adds roughly $17,000 to the bridge on its own.
This is where bridge financing differs from a mortgage, and differs in your favour. A fixed mortgage in Canada compounds semi-annually. A bridge does not compound at all — it is simple interest, charged per day, on the amount actually advanced.
Three inputs, and you control one of them. The premium over prime and the set-up fee are the lender’s; the number of days is a product of the two closing dates you agree to. Shortening the gap by a week is a real saving, and it is negotiated when offers are written — not afterwards.
A Waterloo Region move: selling at $780,000, buying at $950,000, with three weeks between the two closings. Every figure below is invented for the illustration — but the structure is exactly the one a lender uses.
This is the ceiling. No mainstream lender will advance more than the equity actually coming to you.
Land transfer tax and legals add $17,675 — more than half the deposit. Leave them out and the bridge is short on closing day.
Borrowing $342,675 for three weeks so that a family can take possession, move once, and hand over the old house afterwards.
Cost is roughly 0.53% of the amount advanced, because it is out for twenty-one days rather than a year. The $88,469 is what remains from the sale once the bridge is repaid — the money that funds the new kitchen, or goes back against the mortgage. Every figure here is invented to show the method. Yours will be different, and depends on lender terms, prime at the time, your closing dates and your existing mortgage.
A bridge request is either approvable or it is not, and it is decided against a short list of tests. There is no reason for these to be a mystery — we run them on your file before it goes anywhere.
It is a well-understood, low-drama arrangement in the ordinary case. These are the situations that are not the ordinary case.
It is usually the least disruptive. It is not automatically the cheapest, and it is worth seeing the four side by side before assuming.
| Bridge financing | Match the closing dates | Sell first, rent | Use existing credit | |
|---|---|---|---|---|
| What it costs | Daily interest plus a set-up fee, for the days used | Nothing directly | Rent, plus moving and storing everything twice | Interest on what you draw |
| What it costs you elsewhere | Nothing — you offer and accept on the dates that suit | Narrows every offer you make and every one you take | Two moves, and buying under time pressure | Needs room already in place before you list |
| Number of moves | One | One | Two | One |
| Needs a firm sale | Yes, always | Yes | Already closed | No |
| Suits | Almost every ordinary move where the dates do not line up | A flexible buyer and a flexible seller, which is uncommon | A falling market, or no urgency to buy | A modest gap, with a line of credit already open |
Tap through each row to compare. Costs and availability vary by lender and by file. Nothing here is a quotation.
Porting, requalifying, using your equity and the buy-first-or-sell-first decision as a straight comparison. Next Home Hub →
A prepayment charge comes straight off your net proceeds, which lowers what can be bridged. Find the number before you list. Penalty Protector Pro →
The whole calculation starts with a sale price. Tracked, rather than guessed at once a decade. Property Monitor Pro →
Based in Waterloo Region, working throughout southwestern Ontario — and able to help wherever in the province you are moving from or to.
The ceiling is the equity genuinely coming to you. A lender works out your net sale proceeds — sale price less the mortgage being paid out, commission, HST on that commission, legal fees and anything else registered — and will not normally advance more than that figure. The amount you actually need is a separate calculation, and it is often larger than people expect because land transfer tax and legal costs on the purchase are part of it.
Simple daily interest on the amount advanced, not the semi-annual compounding used on a fixed mortgage. The lender takes the advance, applies an annual percentage set at a premium over prime, divides by 365 to get a per-day figure, and multiplies by the number of days between your two closings. A set-up fee is added on top. Because the term is days or weeks rather than years, the total is usually smaller than people fear.
It has to be, because it is money you need on the purchase closing date. This is the single most common reason a bridge comes back larger than the client estimated — they calculated the down payment shortfall and forgot that land transfer tax and the lawyer’s account are due the same day.
Not usually from a mainstream lender. A firm sale — conditions waived, the waiver on file — is what tells the lender the money is genuinely coming, and it is the security the bridge is written against. Some alternative lenders will consider an unsold property, priced accordingly, but that is a materially different arrangement and a materially different risk.
This is the real risk of bridging and it should be understood before you sign, not after. The bridge is repaid from sale proceeds; if those proceeds do not arrive, the balance is still owed and the lender can require it to be repaid or refinanced. It is unusual, because bridges are written against firm sales, but it is not impossible — and it is the reason a firm sale matters so much.
Sometimes. Shorter, smaller bridges are often handled through a solicitor’s undertaking against the sale proceeds with nothing registered. Larger or longer ones frequently get a charge registered against one or both properties, which adds legal cost. Ask which applies before you budget for it.
Lender maximums vary and are commonly in the range of about 120 days, with some going longer. It is deliberately short — a bridge is designed to cover a gap between two known dates, not to act as a substitute mortgage while you look for a buyer.
If you have available room on an existing line of credit, it can reduce or remove the need for a bridge entirely — that room counts as cash you already have on closing day. It needs checking rather than assuming: some lenders require a zero-balance statement on the outgoing property, and drawing on it can change how the file is put together.
Yes, fully, including the stress test. The bridge sits on top of an approved mortgage rather than replacing any part of the qualification. A bridge is a timing tool, not a borrowing-capacity tool.
Then no bridge is needed — the lawyers move the funds through on the day and the gap never exists. It is worth aiming for, but lining two closings up exactly constrains what you can offer and what you can accept, which is a real cost of its own.
Almost always the same lender providing the mortgage on the new home. Keeping them together is simpler, faster and generally cheaper than trying to arrange short-term money separately — which is one reason the bridge question belongs in the conversation before you choose a lender rather than after.
Closing dates get chosen in the middle of an offer, in a hurry, often without anyone doing this arithmetic. Twenty minutes beforehand and you will know your net proceeds, the bridge you would need and what it would cost — before it matters.