Bridge Financing in Ontario: How to Buy Before You Sell

The classic squeeze when you move up: your new home closes February 15, but your current home does not close until April 10. On closing day for the new home, your lawyer needs the down payment, yet most of that money is still tied up in the equity of a home you have not been paid for. Those roughly two months are the funding gap.

The mechanics are simple. The lender advances funds based on the expected net proceeds of your current home so you can complete the purchase. When the sale closes and the proceeds arrive, the bridge loan is repaid in full, principal plus interest. In Ontario this is coordinated between the lender and your real estate lawyer, who registers the bridge and ensures it is cleared the moment the sale closes. Source: Ratehub.ca.

How much you borrow

You do not bridge your old home’s sale price. You bridge the slice of the new down payment you cannot reach yet. A common way to size it:

Bridge amount ≈ down payment needed − deposit already paid

Take a simplified WOWA.ca illustration: a $350,000 purchase, a 5% deposit of $17,500 already down, and $165,000 of equity you want to put toward the down payment. The bridge needed is about $147,500, spanning roughly 55 days between the new home closing (Feb 15) and the old home closing (Apr 10). Interest is charged on that $147,500 for those 55 days. Source: WOWA.ca.

How the interest is charged

The rate looks scary; the dollar cost usually is not. Bridge rates run higher than a regular mortgage, typically Prime + 2% to + 3% according to Ratehub.ca and WOWA.ca (some lenders quote up to +4%). But interest is calculated daily and charged only for the days you actually hold the loan, not for a full year. A common formula:

Interest ≈ Loan × Annual Rate × Days ÷ 365

As of June 2026, the prime rate at Canada’s major banks is 4.45% (source: Ratehub.ca), so a bridge would land near 6.45%–7.45%. Using Ratehub’s own example, a $50,000 bridge held for 30 days at Prime + 2.5% works out to roughly $250 to $350 in interest, plus the admin fee. The number stays small because the term is short, not because the rate is low. Source: Ratehub.ca.

This is the hard gate. A bank (A-lender) approves a bridge on the condition that your current home is sold firm, every condition on the agreement of purchase and sale waived, with a confirmed closing date. The lender needs to verify the sale is firm so it knows exactly when the advance will be repaid. Source: Ratehub.ca, TD.

If your old home is only conditionally accepted, or not yet sold, mainstream lenders typically pass. You would be left looking at a private lender, where rates and fees are higher and the risk is greater. Selling firm first, then arranging the bridge, is the safest order.

• Short term: institutional lenders usually cap a bridge at 90 to 120 days, repaid in full on your old home’s closing day. Some cases stretch to about six months, but longer means stricter terms. Source: Ratehub.ca, WOWA.ca.
• Added fees: beyond interest, expect a one-time administration fee of about $200 to $500, plus your lawyer’s cost to handle the bridge. Private lenders may instead charge 1% to 3% of the loan, which grows with the amount. Source: Ratehub.ca.
• The biggest risk — the sale falls through: the whole structure rests on your firm sale actually closing on time. If the buyer defaults, you can be stuck carrying both the new mortgage and a now-due bridge loan with no proceeds to repay it. That is precisely why lenders insist on a firm sale.
• Verbal estimates do not count: the bridge is sized on your home’s expected net proceeds, but the approved amount, rate, and fees should come from the lender in writing — not from a rough number quoted by anyone else.

Q: How is interest on a bridge loan calculated?

Daily. Interest applies only to the bridged amount and only for the actual number of days the loan is outstanding, commonly Loan × Annual Rate × Days / 365. Bridge rates are typically Prime + 2% to + 3%. Because you hold it for weeks, not years, the total is often only a few hundred dollars. Source: Ratehub.ca, WOWA.ca.

Q: Do I need a firm sale on my current home to get a bridge loan?

For most banks (A-lenders), yes. Your existing home must be sold firm, meaning every condition on the agreement of purchase and sale has been waived and there is a confirmed closing date. Without a firm sale, mainstream lenders generally decline; only some private lenders will consider it, at higher rates and fees. Source: Ratehub.ca, TD.

Q: How long does a bridge loan last?

It is short. Institutional lenders usually cap bridge loans at 90 to 120 days, repaid in full the day your current home closes. Some situations allow up to about six months, but longer terms carry stricter conditions. Source: Ratehub.ca, WOWA.ca.

Q: What does a bridge loan cost beyond interest?

There is usually a one-time administration fee of roughly $200 to $500, plus your lawyer’s cost to register the bridge. Private lenders may instead charge a percentage of the loan, often 1% to 3%, which grows with larger loan amounts. Source: Ratehub.ca.