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.”
Playing in the forest today. Always fun exploring. #mountainbikingmortgagebroker
Mortgage Brokering meets mountain biking and craft beer. A couple months ago I set for a bike ride with the intention of answering few mortgage related questions, mission accomplished. Any good bike ride pairs nicely with a tasty beer which we enjoyed @parksidebrewery. Hope you see the passion I have for brokering, biking and beer. @torcabikes #mountainbikingmortgagebroker
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Spotted a ski-bunny today @kirstinjhallett so I trapped ‘er. 📸 credit @troy.hartley
Aidan leading the pack up the Lemming Line in seek of fine fresh powder.
Beautiful British Columbia! A cold winter day at its finest.
Aidan and I braved the -19C temperature and windy conditions for the boot to knee deep turns...it was a no-brainer.
Happy Holidays. Seasons Greetings. Merry Christmas. All the best from Kirstin, Aidan and Michael. Enjoy your family time.
Snow report for today was boot to knee deep in places. Simply an awesome day rippin’ with the kids, I had to show them that I still got it. 📷 credit @jhalskiing
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Extreme tubing, watch until the end. Aidan manages to hold on.
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He was OK, thumbs up. The roll cage and 5-point seat belt did its job.
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This would have been a fun stunt once upon a time!
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My ski buddy getting untracked turns. It was knee to thigh deep all day for him, only shin to knee for me.
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The crew shredding some turns , it was a 23,000 vertical foot kind of day.
Happy belated Hanukah, Merry Christmas and Happy Holidays to all. Be sure to enjoy the festivities.
Top of Swan Falls. I’ve said it many times before and I will say it again, our license plates say it all. BEAUTIFUL BRITISH COLUMBIA. #gooutside
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A tasty beverage while on the water yesterday from @backcountrybrewr and @backcountrybrewing
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Wood to wood gap in Whistler.
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Aidan is captaining the watercraft, mom in just the passenger. Kalamaka Lake.
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Raw kale. Just not the same as a kale caesar salad.
Saratoga Beach fire.
Canadian tuxedo.
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Going vertical. #slickrock
I have a ski buddy, now it’s time to train a biking buddy.
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Zoa Peak, Coquihalla summit 1,500 vertical metres of skiing.
Distancing myself from the real world!
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Does anybody need or want any firewood? It’s free...you come pick it up.
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Saving for a down payment is one of the biggest challenges first-time buyers face. What many don’t realize is that the Canadian government offers a program designed to make it easier—the Home Buyers’ Plan (HBP) . This program allows you to withdraw money from your RRSP to help purchase your first home, without immediate tax consequences. Here’s how it works: Who Qualifies? To be eligible, you generally need to be a first-time home buyer. In practical terms, this means you must not have owned a home in the past four years, nor lived in a property owned by your spouse or partner during that time. There are also special allowances if you’re living with a disability or helping a relative with a disability. In these cases, you can use the HBP even if you’ve owned a home more recently. How Much Can You Withdraw? Under the program, you can access up to $35,000 from your RRSP as an individual. Couples can combine their withdrawals for a total of $70,000 . These funds must have been in your RRSP for at least 90 days before you take them out. Paying It Back The HBP isn’t “free money”—it’s an interest-free loan from your own retirement savings. You’ll have 15 years to repay the full amount back into your RRSP, starting in the second year after withdrawal. Each year, the CRA will send you an HBP Statement of Account outlining how much needs to be repaid. If you don’t make your repayment in a given year, that amount will be added to your taxable income. Why It’s a Smart Strategy The HBP can give first-time buyers a powerful boost toward homeownership. It helps you put together a larger down payment, which can reduce your mortgage amount and monthly payments. Just remember: it’s important to balance the short-term benefit of homeownership with the long-term impact on your retirement savings. Next Steps Thinking about using the Home Buyers’ Plan? Let’s sit down and review whether it’s the right move for you. Together, we can create a strategy that gets you into your first home while keeping your future financial goals on track. 📞 Reach out anytime—it would be a pleasure to guide you through the process.
When it comes to selling your home, most people think the first call should be to a real estate agent. But the smartest first step often isn’t with your agent—it’s with an independent mortgage professional. Why? Because your mortgage plays a bigger role in your bottom line than most people realize. Planning to Buy After You Sell If selling means you’ll also be purchasing another property, you’ll want to know exactly where you stand financially before listing. Mortgage rules change regularly, and qualifying once doesn’t guarantee you’ll qualify again. Getting a pre-approval in place ensures you know what you can afford and eliminates surprises later. On top of that, reviewing the terms of your existing mortgage could uncover options you may not have considered. For example, porting your mortgage instead of arranging a brand-new one could save you thousands. Selling Without Buying Even if you aren’t planning to buy right away, there’s still an important step: understanding the cost of breaking your mortgage. Unless your mortgage is open, penalties apply—and they can be significant. By reviewing the numbers with a mortgage professional, you might find that simply adjusting your timeline could reduce or even avoid costly fees. Navigating Life Changes In situations like a marital breakdown, it can feel like selling the family home is the only path forward. But that’s not always the case. With the right guidance and a legal separation agreement, one spouse may be able to buy out the other, keeping the home and providing stability for everyone involved. The Bottom Line Selling your property is more than just putting a sign on the lawn—it’s about creating a financial plan that protects your equity and positions you for the best possible outcome. Before you take the leap, let’s sit down and review your options. 📞 If you’re ready to talk strategy and make sure you get top dollar for your property, I’d be happy to connect anytime.
