Bridge Financing
Prêt-relais in French
Quick definition
Bridge financing is a short-term loan that covers the gap when your new home closes before your old one sells. The bank advances the equity from your not-yet-closed sale so you can complete the purchase, then repays itself automatically when the sale closes.
The problem it solves
You have sold your current home and bought a new one, but the closing dates do not line up: the purchase closes on the 15th and the sale on the 30th. Your down payment for the new home is the home equity locked inside the old one, and you cannot touch it until the sale closes. Bridge financing fills exactly that gap: the lender advances your sale proceeds early, you close the purchase on time, and the loan is repaid from the sale when it completes.
It is a timing tool, not a long-term loan. Typical bridges run from a few days to a few months, and many lenders cap them at 90 or 120 days.
What lenders require, and what it costs
The near-universal requirement is a firm sale: an unconditional, signed purchase agreement on your current home, with all conditions (financing, inspection) waived. The firm contract is what the lender is really lending against, because it tells them exactly when and how they get repaid. You will usually arrange the bridge with the same lender funding your new mortgage.
Pricing reflects the short, administrative nature of the loan: interest typically runs around prime plus 2 to 5 percentage points, plus a flat administration or legal fee of a few hundred dollars (as of July 2026). The loan is interest-only, and repayment is automatic: your lawyer or notary directs the sale proceeds to pay it off at closing. Because the term is so short, the high rate matters far less than it sounds.
If your sale is not firm
Without an unconditional sale agreement, mainstream bridge financing is generally off the table: the lender has no guaranteed repayment date to lend against. The fallback options are private lenders at meaningfully higher cost, or opening a HELOC on your current home before listing it, since lenders will not usually open one on a property already for sale.
In Canada
Bridge loans are a routine part of Canadian real estate transactions, and every major bank offers them, but they are not automatic: tell your lender and your lawyer or notary about mismatched closing dates as early as possible, because the bridge has to be approved and documented before the purchase closes. In Québec, the notary handling both transactions coordinates the payout mechanics.
A bridge covers a gap between two dates you already have under contract. If your home has not sold at all, what you need is not a bridge but a financing plan for carrying two properties, which is a much bigger conversation with your lender.
Worked example: 30 days, $300,000
Sophie's new home closes on June 1, but the firm sale of her current home closes June 30. She needs $300,000 of her equity for the down payment on June 1. Her bank bridges the $300,000 for 30 days at 9% (illustrative, as of July 2026): interest is $300,000 x 9% x 30/365, about $2,200, plus a $400 administration fee.
On June 30, the sale closes and the notary repays the bridge automatically. For about $2,600 total, Sophie avoided moving twice, storing her furniture, and renting in between. Viewed as the price of not moving twice, a bridge is usually cheap for what it buys.
Reviewed by Alexandre Bernier, CFP®, CIM®, PFP®·Updated July 2026