The honest answer: Bridge financing is short-term lending that lets you close on your new Ontario home before your existing home’s sale closes. Most lenders offer it for 30-120 days at prime + 2-4%. It costs $1,000-$5,000 in interest + fees for a typical Ontario buyer, and is meaningfully easier to arrange than most homeowners realize.
When you actually need bridge financing
You need bridge financing when:
- You’ve sold your current home (firm sale)
- You’ve bought your next home
- The closing dates don’t align — the new home closes BEFORE the old home’s sale closes
This is increasingly common in the 2026 Ontario market because buyers are pickier about closing dates than they used to be.
If your old home closes BEFORE the new home, you don’t need bridge — you just deposit the proceeds and use them at the new home’s closing. If they close the same day, you also don’t need bridge (the lawyer handles the simultaneous closing).
How it works
Mechanically:
- You apply for bridge financing through your mortgage lender (usually the same lender doing your new mortgage)
- You provide: firm sale agreement on your existing home + new home’s purchase agreement + standard income/credit docs
- Lender approves a bridge loan up to the EQUITY in your old home (sale price minus existing mortgage minus closing costs)
- At the new home’s closing, the bridge funds + your new mortgage + your liquid down payment combine to cover the purchase
- When your old home’s sale closes (typically 30-90 days later), the proceeds pay off the bridge automatically
The cost — typically $1,000-$5,000
Bridge financing has two components:
- Interest: typically prime + 2-4% (so 6-8% range in 2026)
- Setup fee: typically $200-$500
Example math on a $500K bridge for 60 days at 7% interest:
- Interest: $500,000 × 7% × (60/365) = $5,753
- Setup: $400
- Total cost: ~$6,150 for 60 days of bridge financing
For shorter bridges (30 days) on smaller amounts ($200-300K), total cost is typically $1,500-$3,000.
Requirements — what lenders need
To approve bridge financing, lenders require:
- Firm sale on your existing home (all conditions waived, agreement is binding)
- Both transactions in a reasonable timeframe (typically bridge ≤ 120 days)
- Sufficient equity in the old home to cover the bridge + existing mortgage
- Standard income + credit verification (similar to mortgage approval)
What you can’t get bridge financing on:
- Conditional offers (you haven’t sold yet — too risky for the lender)
- Cash-strapped homes with little equity
- Bridges longer than 120 days (rare; lenders consider these too risky)
Alternatives to bridge financing
1. Align closing dates. If you can negotiate matching closing dates on both transactions, no bridge needed. Most realistic in non-rushed sales.
2. Use a HELOC on the existing home. If you already have a HELOC, you can draw from it to cover the new purchase, then repay when the old home sells. Often cheaper than bridge financing for amounts under $300K.
3. Use liquid savings. If you have the cash, just use it temporarily. No interest cost. Replenish from the old home’s sale proceeds.
4. Negotiate a longer-than-usual closing on the new home. Sellers will sometimes accept 90-120 day closings for the right offer. Eliminates bridge need.
Bridge for downsizing — slightly different
Downsizers usually have substantial equity but smaller mortgage needs. Bridge financing is often easier to arrange because:
- The bridge amount is smaller (you’re buying less expensive)
- The equity buffer is huge
- Lenders view downsize transactions as low risk
Downsizers should still consider HELOC vs. bridge — HELOC is often cheaper for shorter bridges (under 45 days).
The 4-step bridge timeline
- Week -8 to -4: Get bridge pre-approval alongside your new mortgage pre-approval (your mortgage broker handles both)
- Week 0: Existing home goes firm. Bridge financing finalizes based on actual numbers.
- Week 4-12: New home closes. Bridge funds disbursed at lawyer’s office.
- Week 8-16: Old home closes. Proceeds automatically repay the bridge.
If your timeline works, the whole bridge process is invisible to you — your mortgage broker and lawyer coordinate the moving parts. You just sign at each closing.
When NOT to use bridge financing
- You haven’t sold yet (conditional offer): Wait until firm. Bridge isn’t available pre-firm.
- Tight equity: If your old home’s equity barely covers the bridge amount + existing mortgage, lenders will decline. Find another solution.
- You’re stretching to buy: If you need the bridge AND maximum mortgage AND credit lines just to close, you’re over-buying. Reconsider the purchase price.
For your specific situation, a 15-min conversation walks through whether bridge makes sense for you and connects you to Ontario mortgage brokers who handle bridges routinely. Related: Mortgage renewal in 2026 · First-time home buyer guide.
Frequently asked questions
How much does bridge financing cost in 2026?
Typically $1,000-$5,000 in interest + fees for a typical Ontario bridge of 30-90 days. Math: prime + 2-4% interest rate (6-8% in 2026) × bridge amount × duration. A $300K bridge for 45 days at 7% costs approximately $2,600 in interest plus a $300-500 setup fee.
Can I get bridge financing without a firm sale on my existing home?
No. All Canadian lenders require a firm sale (all conditions waived) before approving bridge financing. The bridge is secured by the equity in your existing home, which only becomes ‘real’ once the sale is firm. If you haven’t sold yet, alternatives include HELOC draws or longer closing dates negotiated with the seller of your new home.
Is bridge financing better than a HELOC?
Depends on amount and duration. For short bridges (under 45 days) and smaller amounts (under $300K), an existing HELOC is usually cheaper. For longer bridges (60-120 days) and larger amounts ($500K+), dedicated bridge financing is typically simpler to arrange and only slightly more expensive than HELOC.
Who arranges bridge financing — my agent or my mortgage broker?
Your mortgage broker (or your bank’s mortgage specialist). The agent’s job is to negotiate workable closing dates on both transactions; the mortgage broker structures the bridge financing. They coordinate — the lawyer handles the actual money movement at closing.
If you stayed exactly where you are for another 12 months — what would have to change for that to be the right move?
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 | Alex GoodmanSales Representative · RE/MAX Your Community Realty, Brokerage Alex Goodman is a Sales Representative with RE/MAX Your Community Realty, Brokerage, serving the Greater Toronto Area. He specializes in residential sales across Ontario — luxury, first-time buyer, and downsizing transactions — and maintains InstantCalculator.ca as a free public resource for Ontario homeowners researching their property value. |