Quick answer: A bridge loan is short term financing that lets you use the equity in the home you are selling as the down payment on the home you are buying, when the purchase closes first. Banks offer bridge loans when the sale of your current home is firm and unconditional, usually for up to about 90 days. If your home is not sold yet, a private bridge loan or a second mortgage can fill the gap, but it costs more.
Timing rarely lines up perfectly in the Lower Mainland. You find the right home, but your current one closes a few weeks later. A bridge loan solves that gap without forcing you to sell in a rush.
How does a bridge loan work?
Say your new home closes on March 1 and your current home closes on March 25. On March 1 you need your down payment, but your equity is still tied up in the house you sold. The bridge loan advances that equity for those 24 days. When your sale closes, your lawyer or notary pays the bridge back from the sale proceeds.
| Illustrative example | Amount |
|---|---|
| Sale price of your current home (firm) | $1,100,000 |
| Mortgage to pay off on that home | $450,000 |
| Selling costs, such as commission and legal fees | about $45,000 |
| Equity available to bridge | about $605,000 |
What do banks need for a bridge loan?
- a firm, unconditional sale agreement on your current home;
- an approved mortgage for your new home, usually with the same lender;
- a short gap between the two closings;
- a lawyer or notary instructed to repay the bridge from the sale.
Bank bridge loans carry interest for the days you use them plus a small administration fee. Because the term is short, the total cost is often modest compared to the size of the loan.
What if your current home has not sold yet?
Without a firm sale, banks usually will not offer a bridge loan. Your options then include:
- A private bridge loan secured on your current home. Private lenders look at your equity rather than a firm sale, but rates and lender fees are higher.
- A second mortgage on your current home to raise the down payment.
- A home equity line of credit set up before you buy, if you have room and qualify for it.
- Changing the dates. Sometimes a later completion on the purchase or an earlier one on the sale is the cheapest fix.
Each option has a different cost and risk. If you might end up owning two homes for months, you need a plan for carrying both payments, property taxes and insurance.
What does a bridge loan cost?
Costs depend on the lender and the type of bridge:
- Bank bridge: interest for the days used and an administration fee. No appraisal is usually needed.
- Private bridge: a higher interest rate, a lender fee, often a broker fee, legal costs and an appraisal.
Ask for the total cost in dollars for your expected number of days. I give clients the full cost and annual percentage rate in writing before they sign.
What are the risks of bridge financing?
- Your sale could collapse before closing, leaving you with a loan that must still be repaid.
- Closing delays add interest and may need the lender's agreement to extend.
- Carrying two homes strains your budget if the gap grows.
A firm, unconditional sale with a reliable buyer and deposit is the best protection.
What are the key takeaways?
- A bridge loan covers the gap when you buy before your sale closes.
- Banks need a firm sale and keep the bridge short.
- Without a firm sale, private bridges and second mortgages can work, at a higher cost.
- Get the total dollar cost in writing before you commit.
Planning a move? Book an appointment before you write an offer, and I will map out your bridge options and your new mortgage together.
What other questions do readers ask?
Can I get a bridge loan without a firm sale?
Banks and most A lenders want a firm, unconditional sale of your current home before they approve a bridge loan. If your home is not sold yet, a private bridge loan or a second mortgage on your current home may work instead, at a higher cost.
How long can a bridge loan last?
Bank bridge loans usually run for a short period, commonly up to about 90 days, and some lenders allow a little longer. Private bridges can be arranged for longer terms, but every extra month adds cost.
Do I need to qualify for both mortgages?
If the sale of your current home is firm, lenders mainly look at the new mortgage, because the bridge is repaid from the sale. Without a firm sale, you may need to show you could carry both homes for a while.
What happens if my sale falls through?
The bridge loan still has to be repaid. You may need to relist, extend the bridge with the lender's agreement, or replace it with a second mortgage. This is why a firm, unconditional sale matters so much.
Where do these numbers come from?
- Financial Consumer Agency of Canada: mortgages
- Financial Consumer Agency of Canada: home equity lines of credit
- Government of Canada relocation directive: bridge loans when buying before selling
- Criminal Code, section 347 (criminal rate of interest)
Published November 5, 2026. This article is general information, not personal financial advice. Rates and programs change, and every approval depends on your full application. Asim Ali is a licensed mortgage broker with Dominion Lending Centres A.I.M.I. Collective Mortgage Group.