Bridge Financing in Canada Explained (Cost, Requirements, Example, 2026)
Bridge financing covers the gap when your purchase closes before your sale. On $150,000 for 12 days at prime plus 3%: $370 in interest plus a $250–$500 fee.
A bridge loan lends you the equity from a home you have sold but not yet closed, so you can close the purchase first. It runs short, days to a few weeks and rarely more than 90, priced at prime plus 2% to 4%, and carries a setup fee of $250 to $500. On $150,000 for 12 days at 7.45% the interest is about $370; total cost with the fee, roughly $870. Lenders require a firm, unconditional sale agreement on the home you are selling. Without one, most will not bridge.
Figures come from the CostToClose bridge financing calculator.
When you need it
You have sold your current home with a closing date after the closing of the home you are buying, and the down payment on the new home is coming from the sale proceeds. Without a bridge you would need that cash from somewhere else on the earlier date.
If the sale closes first, you do not need a bridge. You need somewhere to live for the gap instead. If the two close the same day, the lawyer sequences the funds and no bridge is needed, though most lawyers prefer at least one day between.
What it costs
| Item | Typical |
|---|---|
| Interest rate | Prime + 2% to 4% (7% to 8.5% at a 4.45% prime) |
| Interest | Charged daily on the amount bridged for the days between closings |
| Setup or administration fee | $250 to $500 |
| Legal fees | Usually a small addition to your purchase legal bill ($200 to $400) |
| Maximum | The net equity from the sale, after paying out the old mortgage and selling costs |
| Maximum term | 30 to 90 days at most banks; some lenders allow longer |
Source: major Canadian lenders' published bridge loan terms; Bank of Canada prime rate. Checked 14 September 2026.
Worked example from the calculator
Buyer closes the purchase 4 September and the sale 16 September. Sale price $650,000, mortgage payout $380,000, selling costs $38,000, net equity $232,000. The new purchase needs $150,000 of that equity on 4 September.
| Item | Amount |
|---|---|
| Amount bridged | $150,000 |
| Days | 12 |
| Rate (prime 4.45% + 3%) | 7.45% |
| Interest ($150,000 × 7.45% × 12 ÷ 365) | $367 |
| Setup fee | $500 |
| Total cost | $867 |
Had the gap been 30 days, interest would be $918. Reproduce this.
What the lender needs
- The firm sale agreement (all conditions waived) on the home being sold, showing price and closing date.
- The purchase agreement on the new home.
- A mortgage statement showing the payout on the old home.
- Usually, the new mortgage with the same lender. Most banks bridge only for their own mortgage customers.
The bridge is registered against the home being sold, or secured by an assignment of the sale proceeds, and is paid out automatically by your lawyer from the sale.
What changes the number
- Days between closings. The only lever that matters much. Moving the sale closing earlier by a week on this example saves about $215.
- Amount. Bridge only what the purchase needs, not the full equity.
- A conditional sale. Most lenders will not bridge on it; those that do charge more and cap the amount.
- No sale at all. That is not bridge financing but a second mortgage or HELOC, at different terms and with full qualification for both payments. See Two mortgages for a week.
Frequently asked questions
How much does bridge financing cost in Canada?
Interest at roughly prime plus 2% to 4% on the amount bridged for the number of days, plus a setup fee of $250 to $500. A $150,000 bridge for two weeks costs under $1,000 all in.
Can I get a bridge loan without selling my house?
Generally no. Lenders require a firm sale agreement. Without one you would need a HELOC or second mortgage and to qualify for both payments.
How long can a bridge loan be?
Most lenders allow up to 30 to 90 days. Longer gaps usually require a different product.
Does bridge financing require qualification?
Lighter than a mortgage: the lender relies on the firm sale. You must still have the new mortgage approved, usually with the same lender.
Is bridge loan interest tax deductible?
Not for a principal residence. For an investment property it may be a deductible carrying cost; confirm with your accountant.
Sources
- Financial Consumer Agency of Canada, buying a home when selling your current home — checked 14 Sept 2026
- Bank of Canada, prime rate (4.45%, September 2026) — checked 14 Sept 2026
- Published bridge financing terms of major Canadian banks — checked 14 Sept 2026
This is general information for Canadian home buyers and sellers, checked against the sources listed above on the date shown, and it is not legal, tax, or mortgage advice. Rules and rates change, so confirm current figures with your lawyer or notary, your lender, or the government office that administers the tax before relying on them.