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Bridge Financing

Also known as: Bridge loan · BC bridge financing · Interim financing · Closing-gap loan

A short-term loan covering the gap between the day your down payment is due and the day the money from your old home actually arrives. Lenders typically fund it for 90 to 120 days and want a firm sale on the outgoing property.

Bridge financing is short-term lending that covers the timing gap when a BC buyer's NEW home closes BEFORE their existing home's sale releases cash. The bridge loan is sized to the closing-day net proceeds the seller will receive (sale price less remaining mortgage, commission, legal, payout penalties, Property Transfer Tax on a replacement, etc.) and is funded for the days between the new-home completion and the existing-home completion.

Typical BC bridge facility: 90-120 days at a contract rate of prime + 2% to prime + 4%, plus a setup fee of $250-$500. Bridge loans are typically only available where both the new-home purchase contract AND the existing-home sale contract are firm (subjects removed): the lender wants visible repayment.

Bridge financing is not a statutory product. It is not. Bridge is entirely a lender-policy product, and not every lender offers it; many credit unions and B-lenders won't. If the existing home is unsold (only listed) at the time of the new-home closing, the bridge product is usually a "purchase plus improvements" or a HELOC against the existing home, not a true bridge, with different underwriting and different costs.

Ask your mortgage broker to confirm the lender's bridge product BEFORE you write subjects to remove on the new-home offer; some buyers have lost a deposit because they assumed bridge was always available and the lender declined post-firm.

CMHC Default Insurance Cap — The maximum home purchase price eligible for CMHC default mortgage insurance, raised from $1,000,000 to $1,500,000 effective December 15, 2024.
OSFI Mortgage Stress Test (B-20) — OSFI Guideline B-20 requires federally-regulated lenders to qualify mortgage borrowers at the greater of (a) the contract rate plus 2 percentage points or (b) the 5.
Closing Day (Completion) — Closing day, or completion, is when the buyer's lawyer registers the title transfer at the BC Land Title Office and the money reaches the seller.
Subject to Sale of Buyer's Property — A condition in a BC offer that makes the purchase depend on the buyer selling their existing home first.
Vendor Take-Back Mortgage (VTB) — A mortgage where the seller lends the buyer part of the purchase price and registers it as a charge on title.

Related terms

See also