Financing Solutions - Bridge Loan
Michael Hallett • August 6, 2026
Bridge Loans Made Simple: Use the Equity in Your Current Home Before It Sells
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 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 existing 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 45–90 days, though some may allow longer in special cases. The cost includes a daily interest rate (often Prime + 5%) 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)
- Current mortgage balance owing: $400,000
- Net proceeds/down payment: $500,000
- New home purchase: closes Nov 30
Because the sale proceeds/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 × 9.45% (prime = 4.45% + 5%) ÷ 365 = $129.45/day
- 14 days = $1,812.30 in interest
- Admin fee = $500
- Total = $2,312.30
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 broker 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.
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The Lookout over looking Tulameen BC. Took some 4x4ing to get there, but we did it.
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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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Ancient blue glacier ice craving out deep valleys. It’s pretty cool standing underneath one...photo credit @dustanwoodhouse
This is a great start to the day!
No better way to share the great outdoors than with friends. @troy.hartley @mike_ilic711 @j_penner70
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Moss, a non-vascular plant and Mother Nature’s carpet reclaiming the forest.
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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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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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On October 28, 2026, the Bank of Canada raised its key interest rate by 0.25%, bringing it to 2.5%. If you have a mortgage, are shopping for a home, or have a renewal coming up, this decision matters. Here is a plain-language look at what changed, why it happened, and what it could mean for you.
Why the Source of Your Down Payment Matters More Than You Think When buying a home, most people focus on how much they need for a down payment. What often gets overlooked is that where the down payment comes from matters just as much to the lender . The source of your down payment affects approval, risk assessment, and how your mortgage is structured. Here’s why lenders care—and what you need to know. 1. Anti–Money Laundering Requirements Lenders aren’t just being cautious—they’re legally required to verify the source of your down payment. To comply with anti–money laundering regulations, lenders must document where every dollar of the down payment came from on every purchase. Acceptable Down Payment Sources Down payments can come from: Your own savings or investments Borrowed funds through an insured program (such as FlexDown) A gift from an immediate family member How You Prove the Source Personal savings: You’ll need bank statements showing the funds have been in your account for at least 90 days , or proof they were accumulated through payroll deposits or other acceptable sources. Borrowed funds: Any borrowed portion must be included in your debt service ratios , since you’re responsible for repayment. Gifted funds: A signed gift letter is required confirming the money is a true gift with no repayment obligation , along with proof the funds were deposited into your account. 2. Financial Suitability and Risk The source of your down payment also tells the lender a lot about your financial habits. Down payments coming from your own savings demonstrate: Positive cash flow The ability to save consistently Strong financial management This reassures lenders that you’re more likely to keep up with mortgage payments. If the down payment is borrowed or gifted, lenders may look more closely at the rest of your application to ensure the mortgage remains affordable. Why a Larger Down Payment Helps From a lender’s perspective, more equity equals lower risk. The more money you have invested in the property, the less likely you are to walk away from the mortgage. This reduces the lender’s exposure and can sometimes result in better terms. 3. Down Payment and Loan-to-Value (LTV) Your down payment directly establishes your loan-to-value ratio (LTV)—the percentage of the property’s value being financed. In Canada: Lenders can finance up to 95% of a property’s value The buyer must contribute at least 5% as a down payment Example: On a $400,000 purchase: Maximum mortgage = $380,000 Minimum down payment = $20,000 How the Source Affects LTV Property value must be genuine and independently supported. Lenders rely on appraisals and comparable sales—not artificial price inflation. If: The seller provides money back The buyer doesn’t bring the full down payment independently Funds move “behind the scenes” …the lender considers this a change to the LTV and may decline the mortgage. All financial details of the purchase must be fully disclosed. Non-disclosure is mortgage fraud , and lenders will not proceed if the numbers don’t align. Final Thoughts Lenders ask for detailed documentation about your down payment source for good reason—it affects legality, risk, and the structure of your mortgage. Understanding these rules upfront helps avoid delays, declined applications, and last-minute surprises. If you’d like to review your down payment options or talk through mortgage financing, feel free to connect anytime. I’d be happy to walk you through the process and help you plan with confidence.
