Bridge Loans Made Simple: Use the Equity in Your Current Home Before It Sells
Michael Hallett • October 3, 2025
Buying and selling a home at the same time can feel overwhelming. Between closing dates, possession dates, and getting access to your money, it can quickly become stressful.
A client recently emailed me with this very common question:
"We want to buy a new home, but our down payment is tied up in our current home. If we can’t get that money until the sale closes, how are we supposed to make an offer on a new place? Do we have to rent for a month or longer? We’re confused about how this works."
This situation comes up more often than you might think. The solution is something called a bridge loan.
What is a Bridge Loan?
A bridge loan lets you use the equity in your current home as a down payment on your new home, even before your old home officially closes. This way, you don’t have to delay your purchase or move into a rental while you wait for funds to be released.
How Long Can You Use a Bridge Loan?
Most lenders in Canada offer bridge loans for up to 45–60 days, though some may allow longer in special cases. The cost includes a daily interest rate (often Prime + 2% to 4%) plus a small administration fee (usually $200–$500).
What Do You Need to Qualify?
Lenders will need proof that your current home has sold. To set up the bridge loan, you’ll provide:
- A signed purchase and sale agreement for the home you’re selling
- The subject removal addendum, to confirm the sale is firm and binding
- A recent mortgage statement on your current property
With this, the lender can confirm your sale price, subtract closing costs and real estate commissions, and verify how much equity is available for your down payment.
Example:
- Current home sale: $900,000 (closes Dec 14)
- Mortgage balance: $400,000
- Net proceeds/down payment: $500,000
- New home purchase: closes Nov 30
Because the sale money isn’t available until Dec 14, you would borrow the $500,000 through a bridge loan for those 14 days.
Cost of borrowing:
- $500,000 × 4.70% ÷ 365 = $92/day
- 14 days = $1,288 in interest
- Admin fee = $250
- Total = $1,538
Key Updates About Bridge Loans Today
- Not every lender offers bridge financing—some limit it to clients with both mortgages at the same institution.
- Longer bridge periods (over 60 days) may require special approval and could have higher costs.
- In competitive housing markets, bridge loans are used more often to help buyers secure a property quickly without waiting for funds.
- If your purchase and sale close on the same day, a bridge loan usually isn’t needed—your lawyer can transfer funds directly.
The Bottom Line
A bridge loan is a short-term, practical, and relatively low-cost way to unlock the equity in your home. It helps you move forward with confidence, without the stress of waiting for funds or finding a temporary rental.
Always talk with your mortgage professional to make sure timing, costs, and paperwork are handled properly. A good plan can save you time, money, and headaches.
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One of the most common questions, “how long does it take to get pre-qualified?” My response, “how fast can you provide the information I need.”
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Aidan leading the pack up the Lemming Line in seek of fine fresh powder.
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Canadian tuxedo.
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If you're a homeowner juggling multiple debts, you're not alone. Credit cards, car loans, lines of credit—it can feel like you’re paying out in every direction with no end in sight. But what if there was a smarter way to handle it? Good news: there is. And it starts with your home. Use the Equity You’ve Built to Lighten the Load Every mortgage payment you make, every bit your home appreciates—you're building equity. And that equity can be a powerful financial tool. Instead of letting high-interest debts drain your income, you can leverage your home’s equity to combine and simplify what you owe into one manageable, lower-interest payment. What Does That Look Like? This strategy is called debt consolidation , and there are a few ways to do it: Refinance your existing mortgage Access a Home Equity Line of Credit (HELOC) Take out a second mortgage Each option has its own pros and cons, and the right one depends on your situation. That’s where I come in—we’ll look at the numbers together and choose the best path forward. What Can You Consolidate? You can roll most types of consumer debt into your mortgage, including: Credit cards Personal loans Payday loans Car loans Unsecured lines of credit Student loans These types of debts often come with sky-high interest rates. When you consolidate them into a mortgage—secured by your home—you can typically access much lower rates, freeing up cash flow and reducing financial stress. Why This Works Debt consolidation through your mortgage offers: Lower interest rates (often significantly lower than credit cards or payday loans) One simple monthly payment Potential for faster repayment Improved cash flow And if your mortgage allows prepayment privileges—like lump-sum payments or increased monthly payments—those features can help you pay everything off even faster. Smart Strategy, Not Just a Quick Fix This isn’t just about lowering your monthly bills (although that’s a major perk). It’s about restructuring your finances in a way that’s sustainable, efficient, and empowering. Instead of feeling like you're constantly catching up, you can create a plan to move forward with confidence—and even start saving again. Here’s What the Process Looks Like: Review your current debts and cash flow Assess how much equity you’ve built in your home Explore consolidation options that fit your goals Create a personalized plan to streamline your payments and reduce overall costs Ready to Regain Control? If your debts are holding you back and you're ready to use the equity you've worked hard to build, let's talk. There’s no pressure—just a practical conversation about your options and how to move toward a more flexible, debt-free future. Reach out today. I’m here to help you make the most of what you already have.
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