You found the next house. You've sold the current one. Closing dates don't line up. That's bridge financing.
Most Ontario lenders do it. Most buyers don't understand what it actually costs. Here's the real number.
What bridge financing is
A bridge loan covers the gap between buying your new home and getting the proceeds from the sale of your old one. The lender effectively lends you your own equity for a few days to a few months.
Typical scenario: you close on the new house April 15. Your old house closes May 30. You need $400K of equity to complete the new purchase, but it's locked in the old house until May 30. The bank "bridges" you for those 45 days.
The non-negotiable requirement
You need a firm sale on your existing home. Not a listing. Not "we're going to list it." Not "an offer is coming." A signed, firm Agreement of Purchase and Sale with all conditions waived.
If your existing home isn't firmly sold, you cannot get a bridge loan from a major bank. You can sometimes get an "open bridge" from alternative lenders, but the cost is dramatically higher (more on this below).
This is the single biggest misunderstanding I see. Buyers tell me "I'll just bridge it" without realizing the bank requires the sale to be locked in first.
Rates in 2026
Bridge loan interest is calculated on a per-day basis at roughly prime + 2-3%. With prime sitting at 5.20% in spring 2026, bridge rates are typically:
| Lender type | Bridge rate (2026) | |---|---| | Major banks | 7.20-8.20% | | Credit unions | 6.95-7.95% | | Alternative / B-lenders | 9.00-12.00% | | Open bridge (no firm sale) | 10.00-14.00%+ |
It feels expensive because it is. But it's also short-term -- you're paying it for days or weeks, not years.
Real cost example: a 30-day bridge
You're bridging $450,000 for 30 days at 7.95% (a typical credit-union rate).
Daily interest: $450,000 x (7.95% / 365) = $98.01/day.
30 days of interest: $2,940.
Plus setup fees:
| Fee | Typical cost | |---|---| | Bridge setup / admin fee | $500-$1,000 | | Legal fees (extra) | $250-$500 | | Lender review fee | $0-$300 (often waived) |
Total cost of a 30-day bridge: $3,690-$4,740 on $450K.
That's the actual number. Not nothing, but not catastrophic either -- often less than the cost of a hotel + storage + stress of a same-day move-in/move-out.
When a bridge makes sense
Two situations where the math is clean:
1. Closing date mismatch on a deal you love
You bought a property that closes 14 days before your sale closes. You either bridge it, or lose the new house. If the new property is a true upgrade you'd otherwise miss, $1,500-$2,500 in bridge interest is worth it.
2. Move-out/move-in logistics
Closing two homes the same day means simultaneous moving truck choreography, possessions in cars overnight, dogs at a friend's house, a child crying about their bed. A 7-day bridge gives you breathing room to clean, paint, move slowly. About $700-$1,000 in interest cost.
When bridge financing doesn't make sense
1. Your sale isn't firm
Don't bridge. The bank won't let you anyway, and if you find an open-bridge lender, the rate (10-14%) and risk (your old house may sit longer than expected) puts you in a financial hole.
2. The new home is a stretch on its own
If you needed the proceeds from your old home to qualify, you don't get to bridge as a workaround. Lenders test you on your debt-service ratios with the bridge included. Stretched buyers don't pass.
3. You can use a HELOC instead
If you have an existing Home Equity Line of Credit on your current home with available room, you can sometimes pull from the HELOC to make the new purchase work, then pay it back when the sale closes. HELOCs are often at prime + 0.5% (about 5.70% in 2026), much cheaper than a bridge.
The catch: most HELOCs cap at 65% loan-to-value of your current home. If you've already maxed it for renovations or other debts, no room left.
HELOC vs bridge: side by side
| Feature | Bridge loan | HELOC | |---|---|---| | Rate | Prime + 2-3% (~7-8%) | Prime + 0.5% (~5.7%) | | Setup fee | $500-$1,000 | $0 (if existing) | | Requires firm sale | Yes | No | | Time to set up | 5-10 business days | Instant if existing | | Max amount | Up to your firm-sale equity | 65% LTV cap | | Interest period | Days to weeks | Months or longer |
If you have a HELOC with room and don't need its full 65% capacity, that's almost always cheaper than a bridge -- as long as you can comfortably qualify for the new mortgage with the HELOC debt counted.
Documents your lender will want
To approve a bridge in Ontario, you'll need:
- Firm Agreement of Purchase and Sale for your existing home (all conditions waived).
- Statement of Adjustments from your old home's lawyer showing net proceeds.
- Closing date confirmations for both transactions.
- Same lender on both ends -- most Big Five banks require the new mortgage to be with them too. You can sometimes shop for the best new mortgage and add the bridge through that lender.
- Solicitor on file -- the same lawyer typically handles both deals.
How long can a bridge last?
| Lender | Typical max bridge length | |---|---| | TD, RBC, BMO, Scotia | 90-120 days | | CIBC | 30 days standard, longer with approval | | Credit unions | Often up to 6 months | | Alternative lenders | 12 months but at much higher rates |
Most bridges are 7-30 days. If you're staring at a 90-day or longer mismatch, talk to a mortgage broker -- they'll find a better structure than just stretching a bridge.
A common trap: pricing your old home wrong
Buyers desperate to bridge sometimes accept too-low offers on their existing home just to lock in a firm sale. Then they bridge for 30 days at $3,000 of interest -- but they left $25,000 on the table by selling cheap.
If your bridge cost is exceeded by a price improvement you could've negotiated, you've burned money. Don't let bridge pressure force a bad sale price.
A typical Mississauga move-up scenario
Sarah and James own a $920K Mississauga condo. They've made an offer on a $1.4M Erin Mills detached. New home closes May 5. They list the condo and get a firm sale at $895K closing June 10.
Equity in the condo at sale: $895K - $310K mortgage = $585K. Cash needed at new closing (after their 20% down + closing costs): $475K. Bridge needed: $475K for 36 days.
At 7.95%: $475K x (7.95%/365) x 36 days = $3,724 in interest. Plus $750 in fees = $4,474 total cost.
Their alternative was selling the condo first, renting for two months, double-moving, and missing the new home (sold to another buyer in the meantime). The bridge math works.
What to ask your mortgage broker
Three questions before you sign:
- What's the per-day interest cost in dollars?
- What's the setup/admin fee?
- Do I qualify for a HELOC alternative on my existing home, even if I have to set one up now?
If they can answer all three in under five minutes, you've got a competent broker. If they hedge or promise to "send something later," shop elsewhere.
Bridge financing isn't complicated, but it has to be planned 30-60 days in advance to work cleanly. If you're thinking about a move-up, book a free strategy call and I'll walk through the numbers on your specific equity, timeline, and target home.
Hassan Nouman is a REALTOR with Cityscape Real Estate Ltd., Brokerage. Bridge rates and structures change with the market and lender appetite -- always confirm with your mortgage broker or banker before planning around the figures here.