In short
It lets you use the equity in the home you're selling for the down payment and closing costs on the new one, then it's paid off when your sale closes.
It costs more than a regular mortgage, but it can save a move when the two closing dates don't line up.
How it works
Bridge financing is a short-term loan for when the purchase of your next home closes before the sale of your current one. It lets you use the equity in the home you're selling for the down payment and closing costs on the new one.
When your sale closes, the sale proceeds pay off the bridge loan. Until then, you're carrying the bridge loan, your existing mortgage and the new mortgage at the same time.
Without it, you'd need to close both deals on the same day or find the down payment from somewhere else.
What lenders usually ask for
Most banks want a firm agreement of purchase and sale on your current home before they approve a bridge loan. They'll also want the agreement on the home you're buying, and they often offer it alongside the new mortgage.
Terms are short. RBC, for example, says bridge loans typically run about six months, and can range from 90 days to a year or longer. Each lender sets its own limits.
What it costs and the risks
Bridge loans usually carry a higher interest rate than a regular mortgage, and some lenders add an administration fee. Because you only need it for days or weeks, the total interest is often manageable, but get the numbers in writing.
The main risk is the sale falling through. If your buyer doesn't close, you still owe the bridge loan, so talk to your lawyer about what your firm sale agreement protects.
Planning your two closing dates
If you haven't sold yet, it may be safer to sell first or make your purchase conditional on selling. When both deals are firm, a short overlap with bridge financing can give you time to move without rushing.
Talk to your lender before you sign a purchase agreement, not after. Knowing whether you qualify for a bridge loan, and for how long, helps you choose dates that work for both deals.
Common questions about bridge financing
How does bridge financing work in Ontario?
A bridge loan lets you borrow against the equity in the home you're selling to buy your next home before the sale closes. It's repaid from your sale proceeds on closing. Lenders usually require a firm sale on your current home first.
Do I need a firm sale to get a bridge loan?
Yes, most banks require a firm agreement of purchase and sale on your current home. A conditional sale or an unsold home generally won't qualify. Some private lenders offer other options, but at higher cost, so compare carefully. Your lawyer can review the sale agreement for you.
How long can a bridge loan last?
Bank bridge loans are short, often a few months. RBC says its bridge loans typically run around six months, with terms from 90 days to 12 months or longer. Your lender sets the maximum, so confirm it before you pick your closing dates.
Is bridge financing expensive?
It usually costs more than a regular mortgage, with a higher interest rate and sometimes an administration fee. Because most bridge loans last only days or weeks, the total cost is often modest compared with the price of moving twice. Ask your lender for the full cost in writing.
Sources
General information for Ontario, updated October 2026. Not legal, tax or mortgage advice. Rules change, so confirm with your lawyer, lender or the source above before you rely on it.