Bridge Financing Canada 2026: Costs When You Buy Before You Sell

Bridge financing in Canada is a short-term loan that lets you use the equity in your current home to buy your next one before the sale closes. It solves a timing problem: your purchase closes on one date, your sale closes weeks later, and your down payment is locked in the home you have not sold yet. In 2026, many big-bank bridge loans are priced at prime plus a few percentage points, and with prime at 4.45%, that is a real but manageable cost for a short gap. This guide explains how bridge loans work, what they really cost, what lenders require, and which alternatives to consider if you do not qualify.

Quick Answer

• A bridge loan covers the gap between your purchase and sale closing dates. TD, for example, offers bridge financing for up to 90 days; term limits vary by lender, so ask yours.
• Bank bridge loans are often priced around prime plus 2% to 3%; with prime at 4.45%, that is roughly 6.45% to 7.45%.
• Expect a lender or admin fee of a few hundred dollars plus extra legal costs, and budget for carrying two homes during the gap.
• Most lenders require a firm, unconditional sale agreement on your current home; without one, you may need a HELOC, a private lender, or a different plan.

Pro Tip: Bridge interest is charged by the day, so every week you shave off the gap saves real money. On a $220,000 bridge at 6.95%, each 15 days costs about $630 in interest alone — before the second mortgage payment, taxes, and utilities. When you negotiate either contract, treat the closing date as part of the price.

How Does Bridge Financing Work in Canada?

Say you have found your next home and your purchase closes on November 1. You have also sold your current home, but that sale closes on December 15. Your down payment for the new home depends on the equity you will receive in December. A bridge loan lends you that equity for the 45 days in between.

Here is the typical flow:

1. You sign a firm sale agreement on your current home, with all conditions removed.
2. You get a mortgage approval for the new home with the same lender offering the bridge.
3. The lender advances the bridge loan on your purchase closing date. Your lawyer uses it, along with your new mortgage, to close the purchase.
4. Your sale closes. The proceeds pay off your old mortgage first and then the bridge loan, plus interest. Your lawyer handles the payouts.

Big banks usually offer bridge financing only when you also take the new mortgage with them. TD describes bridge financing as a way to carry mortgages on two properties for up to 90 days, and requires copies of both the sale and purchase agreements plus approval for a TD mortgage or Home Equity FlexLine on the new property. Other lenders set different limits — RBC’s guidance describes bridge terms ranging from 90 days to a year or more depending on the lender — so confirm the maximum before you lock in your dates.

How much can you borrow?

The bridge amount is generally limited to the equity you will receive from the sale, after paying off your existing mortgage, real estate commission, and closing costs. Lenders look at your sale agreement to confirm the number. A rough formula:

You then subtract any deposit you already paid on the new home, because that money is already in trust.

What Does a Bridge Loan Cost in 2026?

The cost has three parts: interest, fees, and the expense of carrying two properties.

Interest

Bridge loans are usually tied to prime. The Bank of Canada policy rate has been 2.25% since late 2025, and the big-bank prime rate is 4.45% as of September 2026. At prime plus 2% to 3%, a bridge loan costs roughly 6.45% to 7.45% a year. TD notes that bridge rates are similar to open-mortgage rates, which are typically higher than what you pay on a regular closed mortgage. Interest is charged only for the days the loan is outstanding.

A worked example

Suppose you need a $220,000 bridge for 45 days at 6.95% (prime plus 2.5%):

• $220,000 × 6.95% = $15,290 a year in interest.
• $15,290 × 45 ÷ 365 = about $1,885 in interest for the bridge period.
• Add a lender or admin fee, often in the range of a few hundred dollars.
• Add extra legal fees for registering and paying out the bridge, which some lawyers charge separately.

In this example, the total bridge cost lands somewhere around $2,300 to $3,000. For many buyers, that is a fair price for not having to rush a sale or rent temporary housing.

Here is how the interest alone scales with the length of the gap, on the same $220,000 at 6.95%:

Carrying two homes

The bigger cost is often the overlap itself. While you own both properties, you may be paying:

• Two mortgage payments, plus the bridge interest.
• Two sets of property taxes and utilities.
• Home insurance on both — and possibly a vacancy condition if the old home sits empty. Call your insurer before you move out, because many policies restrict coverage once a home is unoccupied for an extended period.
• Moving and storage costs, and in most provinces land transfer tax on the purchase.

If your gap is 45 days and your old mortgage payment is $2,000 a month, that alone adds about $3,000. Combined with the bridge interest in the example above, the overlap can easily cost $5,000 or more before taxes, utilities, and insurance. Keep a cash cushion for it. Our guide to building an emergency fund in Canada explains how to size it.

Don’t forget the old mortgage penalty

When your sale closes, your existing mortgage is usually paid off. If you are partway through a closed term, your lender may charge a prepayment penalty. On a variable-rate mortgage, that is often three months of interest. On a fixed-rate mortgage, it can be the higher of three months of interest or an interest rate differential, which can be much larger. Ask whether you can port your current mortgage to the new home instead. Porting can reduce or avoid the penalty, and it may also simplify the bridge.

The penalty also reduces the equity available to bridge, so get a written quote early — it affects how much you can borrow, not just what you pay.

Who Qualifies for Bridge Financing?

Bridge loans are simple once you qualify, but the rules are strict.

• A firm sale. Most mainstream lenders want a firm, unconditional agreement of purchase and sale on your current home. “Conditional on financing” or “conditional on inspection” is usually not enough.
• A firm purchase. You also need the signed agreement for the new home.
• Mortgage approval on the new home. You must pass the mortgage stress test on the new mortgage — qualifying at the higher of your contract rate plus 2% or 5.25%.
• Enough equity. The loan cannot exceed the net proceeds you will receive from the sale.
• A gap within the lender’s policy. Check the maximum term before you agree to closing dates; TD’s is 90 days.

Questions to ask your lender before you sign

Bridge policies are not identical from bank to bank, and small differences can change your total cost. Get the answers in writing:

• What is the exact rate, and is it tied to prime so it changes if prime moves during the bridge?
• What is the lender or admin fee, and is it charged even if the bridge ends up shorter than planned?
• What is the maximum term, and what happens if my sale closing is pushed back a week or two?
• Is there a maximum bridge amount, either in dollars or as a share of my net equity?
• Does the bridge have to be with the same lender as my new mortgage?
• Will my lawyer need to register anything extra, and who pays for it?

Also ask your lawyer to confirm the cost of handling the bridge. Some include it in their standard purchase fee, while others bill it as a separate line item. Knowing both numbers up front lets you compare the true cost of a bridge against alternatives like renting for a month.

If your new mortgage is a big decision on its own, compare terms before you sign. Our guide to variable vs fixed mortgage rates in Canada walks through that choice in the 2026 rate environment.

What Are the Alternatives if You Buy Before You Sell?

If you cannot get a standard bridge loan, or if your gap is too long, you still have options. Each comes with trade-offs.

A HELOC as a do-it-yourself bridge

If you already have a home equity line of credit on your current home, you may be able to draw on it for the down payment and repay it from the sale proceeds. With prime at 4.45%, a HELOC at prime plus 0.5% to 1% costs roughly 4.95% to 5.45% — about two percentage points less than a typical bank bridge. On the 45-day, $220,000 example, that saves roughly $400 to $550 in interest. The catch is timing: lenders are cautious about setting up a new HELOC once a home is listed, so this only works if the line is already in place.

Buying without a firm sale

Buying before you have any sale agreement is the riskiest version. You may have to qualify to carry both mortgages at once, and if your old home sells for less than expected, the shortfall is yours. The Financial Consumer Agency of Canada encourages borrowers to understand every fee and term before signing, and that advice matters most here.

Negotiate the dates

The cheapest bridge is the one you never need. When you make an offer, ask your agent whether the seller will accept a closing date that matches your sale. When you sell, try to choose a buyer whose closing date lines up with your purchase. Shrinking a 60-day gap to 15 days cuts the bridge interest in the example above from about $2,510 to about $630 — and cuts the carrying costs by the same proportion.

Key Takeaways

• Bridge financing in Canada usually requires a firm sale on your current home; term limits vary by lender, with TD offering up to 90 days.
• With prime at 4.45% in September 2026, expect bridge rates of roughly 6.45% to 7.45% at prime plus 2% to 3%.
• Calculate interest by day: a $220,000 bridge at 6.95% for 45 days costs about $1,885 before fees, or about $630 per 15 days.
• Budget for two mortgages, two sets of taxes and utilities, and insurance on both homes — and check vacancy conditions on the old one.
• Set up a HELOC before you list if you may want a cheaper do-it-yourself bridge.
• Negotiate closing dates first; a shorter gap is the easiest way to cut the total cost.

Frequently Asked Questions

How much does bridge financing cost in Canada?

Many bank bridge loans are priced around prime plus 2% to 3%, which is roughly 6.45% to 7.45% with prime at 4.45% in September 2026. You also pay a lender fee, often a few hundred dollars, and possibly extra legal fees. Interest is charged only for the days the loan is outstanding — about $42 a day on a $220,000 bridge at 6.95%.

Can I get a bridge loan without a firm sale?

Usually not from a major bank. Most mainstream lenders require a firm, unconditional sale agreement. Without one, you may need to use an existing HELOC, qualify to carry both mortgages, or turn to a private lender at a much higher cost.

How long can a bridge loan last?

It depends on the lender. TD offers bridge financing for up to 90 days, while other lenders set different limits, and private lenders may go longer at higher cost. If your sale is delayed past the bridge term, talk to your lender right away.

What happens if my sale falls through?

You still owe the bridge loan and must close the purchase. You would need to relist the home, find other financing, or carry both properties until it sells. This is why lenders insist on a firm sale and why you should keep a cash cushion.

Is a HELOC cheaper than a bridge loan?

Usually, yes — a HELOC is often priced at prime plus 0.5% to 1%, versus prime plus 2% to 3% for a typical bridge. But it only works if the HELOC is already in place before you list, since lenders are reluctant to open new credit lines against a home that is for sale.

Conclusion

Bridge financing in Canada is a practical way to buy before you sell, as long as your sale is firm and the gap is short. In 2026, expect to pay around prime plus 2% to 3%, a small lender fee, legal costs, and the expense of carrying two homes. Run the numbers by the day, confirm your lender’s term limit, and keep a cushion for surprises. If you cannot qualify, compare a HELOC, a private lender, or selling first. Start by asking your lender for a written bridge quote before you make your next offer.