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Bridge financing

Definition

Short-term loan that lets you close on a new home before the sale of your existing one funds.

Priced at prime + premium, secured against both properties, typically up to 90-120 days.

Bridge financing solves the classic timing gap: your purchase closes on the 1st but your sale doesn't fund until the 15th. The bridge advances your down payment from the equity in your old home so you can complete the purchase and move once.

It's secured against both properties and priced at prime plus a premium (often prime + 2–4%) on an interest-only basis, charged only for the days you use it. Because the term is short, the dollar cost is usually modest — a few hundred to a couple of thousand dollars.

Most lenders require a firm, unconditional sale agreement on your existing home before they'll bridge. Our bridge calculator estimates the carrying cost for your specific overlap.

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A lender

A bank or monoline that prices its lowest rates and tightest underwriting against borrowers who fit prime credit, income, and property criteria. The big banks (RBC, TD, Scotia, BMO, CIBC, NB) and major monolines (MCAP, First National, MERIX) are A lenders.

B lender

An alternative ("alt-A") lender that prices higher than A lenders but flexes on credit history, income documentation, property condition, or self-employed earnings. Examples include the alternative-lending programs of Equitable Bank and Home Trust.

Closed mortgage

A mortgage that limits how much extra you can prepay each year and charges a penalty if you break the term early. Almost all standard Canadian mortgages are closed because the rates are materially lower than open.

Collateral charge mortgage

A mortgage registered against your property for more than the actual loan amount, letting you increase the limit later without re-registering. Common at TD and Scotia. Makes inter-lender switches harder mid-term.

Conventional mortgage

A mortgage with at least 20% down. No mortgage default insurance required. Pricing is typically higher than insured because the lender carries more of the credit risk.

HELOC

Home Equity Line of Credit

A revolving line of credit secured against your home, typically up to 65% LTV stand-alone or 80% combined with a mortgage. Variable rate (prime + spread), interest-only minimums, redraw any time.