Bridge Financing Toronto
Closing dates rarely line up. Bridge financing covers the days or weeks between taking possession of your new home and receiving the proceeds from the one you sold, so you are not forced to move twice or accept a worse offer to match a date.
- Interest-only for the overlap period
- Arranged with the new mortgage, not after
- Days to a few months
How bridge financing works
The lender advances your down payment against the equity locked in the property you have sold. You pay interest only for the overlap period, and the loan is repaid in full out of the sale proceeds when that deal closes.
Institutional bridge financing requires a firm, unconditional sale agreement on the outgoing property. That is the security the lender is relying on, so a conditional or unsold listing does not qualify.
Expect a per-day interest cost plus a modest administration fee, and your lawyer's fee for handling both closings. Set it up at the same time as your new mortgage, with the same lender wherever possible, because a bridge arranged in the final week is the version that goes wrong.
When your sale is not firm yet
If you have bought before selling and the sale is still conditional or not yet listed, an institutional bridge is generally unavailable. A short-term private mortgage against one or both properties can serve the same purpose, at a higher cost, with the sale as the exit.
The same tool covers a purchase where the down payment is coming from a source that will not land in time, such as an investment redemption, a business distribution or a gift arriving from abroad.
Bridging into a build or a renovation
Bridge and short-term debt is also how buyers close on a property that needs work before an institutional lender will fund it. You bridge the purchase, complete the work, then refinance to a term mortgage on the improved value.
For ground-up projects and land, see our development financing page, where funds are advanced in draws instead of one lump sum.
How the process runs
- Step 1
Send both closing dates
Purchase closing, sale closing, and the sale agreement if you have one.
- Step 2
We size the bridge
Down payment needed, equity available, and the exact cost for the overlap period.
- Step 3
Arrange it with the mortgage
The bridge is set up alongside your new mortgage so there is one set of instructions to your lawyer.
- Step 4
Repaid on your sale
The loan clears automatically out of the sale proceeds.
Frequently asked questions
- How much does bridge financing cost in Toronto?
- Institutional bridge loans are typically priced at a premium over prime plus a set-up fee, charged only for the days you use the money. Because the term is measured in days or weeks, the dollar cost is usually modest compared with the price of matching closing dates badly.
- Can I get bridge financing without a firm sale?
- Not from an institutional lender, since the firm sale is the security. A short-term private mortgage can fill the gap instead, at a higher rate, with the eventual sale as the exit.
- How long can a bridge loan last?
- Institutional bridges usually run up to about 90 to 120 days. Private short-term financing is commonly written for six to twelve months when a longer runway is needed.
- What if my sale falls through while I am bridged?
- The bridge becomes due and must be replaced, normally with a private mortgage until the property sells. It is the main risk of the structure, and the reason a plan B is worth discussing before you sign.
Related pages and tools
Private mortgages Toronto
How private lending works in Toronto, what it costs, and when it is the right tool instead of a bank mortgage.
Second mortgages Toronto
Borrow against your equity without breaking the first mortgage or paying a discharge penalty.
Development financing Toronto
Draw-based construction and land financing for GTA builders and developers.
Refinance in Toronto
When a full refinance beats a second mortgage, and how the penalty math actually works out.
Mortgage calculators
Private mortgage cost, second mortgage LTV, and debt consolidation savings, in plain numbers.
Meshesha Robel, Mortgage Agent Level 2 - FSRA M15001135, Mortgage Alliance brokerage 10530. Nothing here is an offer or a commitment to lend. Every file is subject to lender review, appraisal and approval.