Bridge loan cost
Bridge financing covers the gap between selling your current home and closing on the new one. Typically prime + 2-5% with a small setup fee — short-term by design.
Your scenario
Result
Bridge financing usually requires both the sold property's firm-sale agreement and the new property's purchase contract. Same-day closings skip the bridge entirely.
What bridge financing solves
You bought a new house with a closing date that's 30, 60, or 90 days earlier than the sale of your current home. Without bridge financing, you can't complete the new purchase because the down payment is locked up in the property you haven't sold yet. Bridge financing covers that gap — the lender advances the locked-up equity so you can close on the new home, then pays itself back when your old home sells.
Typical Canadian bridge terms
- Rate: prime + 2–5% (annualized); often quoted as a daily rate
- Term: 30 to 120 days maximum; some lenders go to 180 days
- Setup fee: $250–$800
- Maximum amount: net equity from the sale (price minus current mortgage minus selling costs)
- Security: collateral mortgage on BOTH properties for the bridge period
What lenders require
- Firm sale agreement on the old property — most lenders won't bridge against a conditional sale
- Firm purchase contract on the new property
- Both transactions handled by the same lawyer (preferred — sometimes required)
- Old home's buyer mortgage approved (lender will sometimes ask for proof)
Cost example — 60-day bridge
$180,000 bridge needed for 60 days at prime + 3.5% (10.45% total):
- Daily interest: $180,000 × (10.45% / 365) = ~$51.50/day
- 60 days of interest: ~$3,090
- Setup fee: $500
- Total bridge cost: ~$3,590
Manageable for a typical move — but it scales fast if your old home doesn't close on time.
When you don't need a bridge
- Same-day closings — your real estate lawyer coordinates the funds flow directly
- Buying first, then selling at unconditional offer — your existing mortgage covers you until both close
- Lender already approved a wraparound — some banks allow a temporary increase on the new mortgage to skip the bridge
- HELOC on the old property — you can sometimes draw on a HELOC for the down payment, then pay it off at the sale
Common gotchas
- Conditional sales: most lenders won't bridge against an offer with conditions still active. Wait for firm.
- Old home doesn't close on time: extra days cost real money. Build buffer into your purchase's closing date if possible.
- Buyer's mortgage falls through: if your buyer's financing collapses, you're on the hook for the bridge AND a re-listed property
- Legal fees: bridge financing adds $300–$700 in legal fees on top of regular closing costs