Guide · Bridge Loans · Private Lending
See How Bridge Loans Work (Toronto & GTA)
A bridge loan is short-term capital that covers the gap between two closing dates. It can make a purchase possible—if the costs and “what if” scenarios are controlled.
Bridge loans solve timing
They’re not long-term debt—they’re a short gap fill between two closings.
Sale certainty drives risk
A firm sale and stronger equity buffer usually means smoother approvals and terms.
Write the worst case down
If the sale delays or nets less than expected, what’s your Plan B?
What a bridge loan is (plain-English)
If you buy a new home before your current one closes, you can run into a short-term cash gap. Down payment, completion funds, and closing costs may be tied up in the sale that hasn’t happened yet.
A bridge loan is simply short-term financing repaid by the proceeds of your sale, designed to keep both transactions on track.
When it makes sense (and when it’s risky)
Lower-risk scenarios:
- Your current home has a firm sale (conditions satisfied; higher certainty)
- You have a strong equity buffer (more conservative LTV)
- The gap between closing dates is defined and short
Higher-risk scenarios:
- Your home is only listed or the offer is conditional
- Market volatility makes the sale price uncertain
- You have little liquidity buffer if the sale delays
If you’re on the “high uncertainty” side, the question isn’t only “can I get a bridge?”—it’s “how do I reduce the risk variables first?”
How it’s sized: equity + the gap
Sizing usually depends on two things:
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The gap: how much you need to bridge (down payment, completion funds, costs).
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Net sale proceeds: expected sale price minus mortgage payoff, commissions, legal, and other costs.
The lender’s real question: even with small delays or price variance, can you safely repay the bridge loan?
Process + timeline: bridge loans are “detail management” products
The tighter the timeline, the more you should start early—especially appraisal and legal. Here’s the most common step sequence:
Bridge-loan timeline (common steps)
1) Confirm both closing dates + the funding gap
- How many days between purchase and sale closings?
- Is the gap for down payment, completion funds, or both?
2) Confirm equity + mortgage payoff balance
- Get mortgage payout statements / balances
- Estimate net sale proceeds after costs
3) Start documents + appraisal + legal early
- APS, listing/sale details, ID + source of funds
- Early appraisals and legal work reduce “rush pricing”
4) Approval + funding instructions
- Lender validates LTV, marketability, and sale certainty
- Confirm fees and net proceeds at funding
5) Close the purchase + bridge the gap
- Bridge funds complete the purchase closing
- Sale closes and repays the bridge loan
6) Handle delays (if needed) with a Plan B
- Know extension pricing and whether re-approval is needed
- Plan B options: refinance fallback, liquidity reserve, short extension
Costs + terms to watch (where surprises hide)
Bridge-loan all-in cost often includes:
- Interest (often calculated by actual days outstanding)
- Lender and broker fees
- Appraisal and legal costs
- Extension pricing (where many people get surprised)
Focus on: net proceeds, extension terms, early repayment flexibility, and your worst-case cost ceiling. If you want a quick sanity check, start with our True Cost tools.
Safer alternatives (often overlooked)
Before you bridge, evaluate common alternatives:
- Negotiate closing dates so they line up better
- Increase sale certainty by pushing toward a firm sale
- HELOC / existing credit lines if you already qualify (often cheaper)
- Temporary family capital (ensure it’s documented and compliant)
Not every timing gap requires bridge financing. The goal is controlled risk at a cost you can live with.
If your dates don’t line up, don’t rely on luck
Good bridge financing is about timeline control, equity clarity, and a real Plan B. Start by gathering both closing dates and your mortgage payoff statement—then decide whether a bank bridge, private bridge, or an alternative is the safest path.
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