Here's a call I get more than any other: you've found the right house, your offer's been accepted, and your own sale doesn't close until weeks after the new purchase does. The money is real. It's just sitting in the wrong house for a while, and the closing dates won't budge.
Do you walk away?
Usually, no. Bridge financing exists for exactly this gap, and most Ontario homeowners I talk to have never had it explained until they're already losing sleep over it.
What is bridge financing?
A bridge loan is short-term money that covers the gap between buying a new home and selling your existing one. That's it. You get temporary access to equity you already have, you complete your purchase on time, and the loan gets repaid the day your sale closes.
Say you've found the right home in Georgetown closing four weeks out, and your current place closes six weeks out. That two-week overlap leaves you short the down payment. A bridge loan covers it. Your sale closes, the bridge gets repaid in full, and life carries on.
A bridge loan doesn't change your mortgage. It just buys you the time your closing dates don't give you.
How bridge financing works, step by step
People expect this part to be complicated. It isn't, at least not when the file is set up right:
- You find a new home and confirm a closing date.
- Your sale on the current home goes firm. Not conditional. Firm.
- I arrange the bridge loan, almost always through the lender handling your new mortgage.
- The bridge covers the down payment, and sometimes closing costs too.
- Your existing home closes and the bridge is repaid in full.
Most bridge loans run a few weeks to a few months, just long enough to cover the gap. In an active market like Halton Hills, that flexibility can be the difference between securing the property and watching another buyer get it.
What lenders require for a bridge loan in Ontario
Lender criteria are fairly consistent here, and one item matters far more than the rest: a firm, signed agreement of purchase and sale on your current home. Without that, most lenders won't open the file. Beyond the firm sale, they want enough equity in your existing property to cover the loan amount, credit and finances that would pass a normal mortgage application, and in nearly every case they'll insist on holding both the new mortgage and the bridge loan themselves. That last condition catches people off guard. It also means your choice of lender for the new mortgage quietly decides whether bridge financing is even on the table.
Bridge financing is generally not available if your current home hasn't sold yet. The lender needs a firm sale in place. If you're buying without a firm sale on your existing home, that's a different conversation, and a HELOC or private bridge may apply instead.
What bridge financing costs
Bridge loans cost more than a mortgage on a rate basis. They should; the lender is taking short-term risk on your timing. What surprises clients is how small the dollar amount usually ends up, because you only hold the loan for weeks:
| Cost Item | Typical Range |
|---|---|
| Interest rate | Prime + 2% to Prime + 5% (rates vary by lender) |
| Administrative fee | $200 to $500, depending on the lender |
| Interest calculation | Daily, so shorter bridge = lower total cost |
| Legal fees | May apply if a separate registration is required |
To put numbers on it: a $50,000 bridge loan held for 30 days at Prime + 2.5% works out to roughly $250 to $350 in interest, plus the admin fee. I have yet to meet a homeowner who regretted paying that for the certainty of landing the right property. Plenty regret the house they let go because the dates scared them.
Buying and selling at the same time?
Let's look at your specific timeline and see whether bridge financing is the right move, and what it would actually cost you.
Book a Discovery CallThe real benefits for Ontario homeowners
Bridge financing solves one problem: mismatched closing dates. Solving it changes how you shop, though.
You can make a firm offer with no sale condition on the new home. In a competitive market that's worth real money, because sellers treat firm offers differently. You stop letting the calendar decide which houses you're allowed to pursue. And some of my clients use the bridge to move into the new home before the old one closes, which means one move instead of two and an empty house that shows better.
The risks worth understanding
Bridge financing behaves well in most files. The risks live at the edges.
The big one: your buyer walks and your sale collapses. You still owe the bridge loan. That's the exact scenario lenders are protecting against when they insist on a firm sale, and it's why I never treat that requirement as a formality. A delayed closing is the smaller, more common problem. Interest is calculated daily, so every extra day costs a little more. Rarely a large amount. It adds up if the timeline stretches. And keep in mind that not every lender offers bridge financing at all; most major banks and credit unions will, but only when they're also handling your new mortgage, which is something I confirm before a client is committed anywhere.
Alternatives to bridge financing
Bridge financing isn't the only way through mismatched closing dates.
Sometimes the cleanest fix is negotiating a longer closing on the new home; a seller with flexibility may give you the extra few weeks and the whole problem disappears. A HELOC on your current home can cover the gap too, but only if it's already in place. Lenders generally won't set one up mid-transaction on a house you're about to sell. And when a bank won't lend without a firm sale and your timeline won't move, private bridge financing exists. Rates are higher. Sometimes it's still the right call.
The right choice depends on your equity, your timeline, and what your lender will actually do. Honestly, this is exactly the kind of file where a broker earns their keep compared to walking into one bank and taking whatever answer you get.
Common questions about bridge financing
Do I need a firm sale to get a bridge loan?
Yes, in most cases. Most lenders require a signed agreement of purchase and sale on your current home before approving a bridge loan. Some lenders will consider a bridge without a firm sale, but the terms are stricter and the rates are higher. If your sale isn't firm yet, ask about your alternatives before assuming bridge financing is off the table.
How long can I hold a bridge loan?
Typically a few weeks to a few months. Most lenders cap bridge loans at 90 to 120 days. The loan is designed to cover the gap between two closing dates, not to serve as long-term financing.
Will I pay more interest than a regular mortgage?
Yes. Bridge loans are short-term and carry higher rates than traditional mortgages. The total dollar cost is usually modest because the loan is held briefly. A broker can calculate the exact cost for your loan amount and expected timeline before you commit.
Can I use a bridge loan for closing costs, not just the down payment?
Often, yes. Many lenders will include closing costs in the bridge amount if the equity in your current home supports it. This varies by lender. Review what's included before you finalize the loan amount.
What happens if my current home sale falls through?
You remain responsible for repaying the bridge loan. This is the scenario lenders protect against by requiring a firm sale. If your sale collapses, contact your mortgage broker immediately. Options may include extending the bridge, refinancing, or finding a new buyer quickly. The sooner you act, the more options you have.
The bottom line
Bridge financing is a practical tool for Ontario homeowners buying and selling at the same time. It isn't cheap on a rate basis and it isn't for every file. But the total cost is usually small next to what you get back: the ability to buy the right house without forcing an impossible timeline.
The part people get wrong is the order. Talk to a broker before you make the offer, not after, so you know whether bridge financing is available on your file and what it will actually cost. Then if the closing dates don't line up, you already have the plan.