You’ve found the right home, but your current one hasn’t sold yet, or it has sold and closes after your purchase. You need your equity now, before the money from your sale arrives. That gap is what bridge financing fills.

Two very different situations

Your home has sold, but closes later

If you have a firm sale, with all conditions removed, many banks offer short bridge loans against the equity in the home you’ve sold. This is usually the cheapest option. Ask your lender or broker about it first.

Your home hasn’t sold yet

Without a firm sale, most banks won’t offer bridge financing. This is where a private bridge loan can help: a short-term mortgage against your current home, sometimes both homes, that provides the down payment for the new one until you sell.

How a private bridge loan works

  1. The lender looks at the equity in your current home, and sometimes the new one.
  2. The loan provides the down payment and closing costs for your purchase.
  3. You make interest payments, often interest-only, during the bridge.
  4. When your current home sells, the sale proceeds pay off the bridge loan.

The risks to plan for

  • The sale takes longer than expected. Ask about extension terms and costs.
  • The sale price is lower than hoped. Make sure the numbers work at a conservative price.
  • Carrying two homes. You may have two sets of payments, taxes, insurance and utilities for a while.
  • Fees. A bridge loan carries fees even if you only need it briefly. Ask about minimum interest periods.

Questions to ask

  • What if my home hasn’t sold by the end of the term?
  • Is there a minimum interest period if I pay off early?
  • Will the loan be registered on one property or both?
  • How does this affect the mortgage approval on my new home?

Is it worth it?

A private bridge can let you buy the right home without a conditional offer, or avoid selling in a rush. But it adds cost and risk. Compare it with alternatives like a longer closing date on your purchase or selling first and renting briefly.

Get the timing right

A licensed broker can line up the bridge and your new mortgage together, so the closing dates work.

This article is general information, not financial or legal advice. Lender requirements, rates and fees change and depend on your situation.