A bridging loan, called bridge financing in Canada, is a short-term loan that lends you the equity in the home you are selling so you can close on the home you are buying first. In BC it normally needs a firm sale on your current home, lasts from a few weeks to about 90 or 120 days, and is repaid from the sale proceeds.
It solves a timing problem, not a qualifying problem. Below: how it works step by step, what lenders ask for, what it costs with a worked example, and the alternatives when you don’t have a firm sale yet. Every lender figure is dated in the Sources list at the end.
What is a bridging loan?
Most people buying their next home in Kelowna or anywhere in BC need the equity from the current home for the down payment. The trouble is the dates. Your purchase might complete on November 30 while your buyer’s completion date is January 15. For those 46 days, your down payment is locked inside a house you have already sold.
A bridge loan covers that gap. The lender advances the equity you have in the sold home, you use it to complete the purchase, and when your sale completes the lawyer pays the bridge loan off from the proceeds. RBC describes it as using the equity in your current home as the down payment on the next one while you wait for the sale to close.
Bridging loan explained: how bridge financing works in BC
- Sell first, firmly. Your sale has to be firm, meaning the buyer has removed all subjects and is legally bound to complete. RBC and Manulife Bank both require a firm sale; TD asks for the sale agreement and the purchase agreement.
- Get the new mortgage approved. The bridge is usually arranged by the lender providing the mortgage on the new home. TD, for example, ties its bridge financing to an approved TD mortgage or home equity line on the new property.
- The lender sizes the bridge. TD’s method is typical: the sale price, less the mortgage owing, less estimated selling and closing costs. That net equity is the most the bridge can be.
- Your lawyer or notary funds it on the purchase completion date, alongside the new mortgage.
- The sale completes and the bridge, plus interest, is paid out of the proceeds before the rest of the money comes to you.
In the meantime you keep paying the mortgage on the old home until it sells. Manulife Bank notes that the bridge itself is usually interest-only.
What you need to qualify for a bridge loan
- a firm, unconditional sale agreement on your current home (some lenders, such as Manulife Bank, also want the sale handled through a realtor rather than privately)
- a purchase agreement on the new home
- approval for the new mortgage, which means the usual income, credit and stress-test qualification
- enough equity to cover the bridge after the old mortgage, commission, legal fees and any prepayment penalty are paid
Ratehub’s guide adds that traditional lenders tend to look for a credit score of about 650 to 680 and that most cap bridge loans around $200,000, with larger amounts reviewed case by case and sometimes needing a lien on the property.
How long a bridge loan lasts
Bank bridge loans are short. TD says its loan period is typically a maximum of 90 days. Manulife Bank allows up to 90 days. Ratehub says most lenders go up to 120 days. RBC describes a wider range, from 90 days to 12 months or longer. In practice the bridge only needs to last from your purchase completion date to your sale completion date, so the shorter the gap, the cheaper it is. If your gap is longer than your lender’s limit, plan for a different structure before you sign either contract.
What a bridge loan costs: a worked example
Bridge interest is usually priced off prime. Ratehub puts typical bank bridge loans at prime plus 2% to prime plus 3%, plus a flat administration fee of about $200 to $500. TD and Manulife describe the rate as similar to an open or variable mortgage and often higher than your current rate. Prime today is 4.70% (as of October 31).
Here is a dated example using prime of 4.70% on October 29, 2026. A Kelowna couple has sold their home firm for $800,000. They owe $380,000 on it and set aside $35,000 for commission and legal costs (an assumption for this example; the seller closing costs calculator gives a real figure). They are buying a $1,000,000 home that completes 46 days before their sale does. They have $100,000 in savings and a new mortgage of $650,000, so they need $250,000 from a bridge loan.
| 46 days on $250,000 | Rate | Interest |
|---|---|---|
| Bridge loan at prime + 2% | 6.70% | about $2,111 |
| Bridge loan at prime + 3% | 7.70% | about $2,426 |
| HELOC already in place on the old home (prime + 0.50%) | 5.20% | about $1,638 |
When the sale completes, the $800,000 pays off the $380,000 mortgage, the $35,000 in costs and the $250,000 bridge with interest, which leaves about $133,000 for the couple at the 6.70% rate. So the price of buying first was roughly $2,300 to $2,900 including the fee. Compared with a rushed sale, a rental between homes or two moves, that is often cheap.
When you need a bridging loan, and when you don’t
You need one when the purchase completes before the sale and your down payment depends on the sale. That is the usual move-up situation: a family selling a Rutland townhouse to buy a detached home in Glenmore, or a couple moving from a house to a condo who want the new place painted before moving day.
You don’t need one if your savings or other funds cover the down payment, if you can line the two completion dates up on the same day, or if the sale completes first. Matching dates is the cheapest bridge there is, so it is worth asking your realtor to negotiate for it before you look at loans.
Alternatives to a bridge loan
Align the completion dates. Same-day completions are possible in BC. Your lawyer handles both, and the sale money flows straight into the purchase. The risk is that a delay on the sale side holds up your purchase.
A HELOC on the current home, set up before you list. If you can qualify for it, a home equity line of credit is usually cheaper than a bridge and does not need a firm sale. It does need to be in place before the home is sold, and it adds a second payment while you carry both properties.
A private bridge. Without a firm sale, banks generally will not bridge. A private lender may, at a much higher rate and with lender and legal fees. It can make sense for a few weeks when the alternative is losing the home you want. The private mortgage lenders guide covers the costs.
Make the purchase subject to sale. Your offer depends on your home selling. It protects you, though in a busy market sellers often prefer offers without that subject.
Port the existing mortgage. Moving your current rate and balance to the new home can avoid a prepayment penalty on the old one. Porting and bridging often go together. The break penalty guide shows what is at stake if you don’t port.
How to set it up without a scramble
Get pre-approved for the new mortgage before you list, and tell the lender you may need a bridge. That way the bridge amount and rate are known before you sign anything. Our Kelowna pre-approval guide covers the documents. Then, once your sale is firm, send the sale contract to the lender straight away. Bridge paperwork is light, but it cannot start until the sale is firm, and the purchase lawyer needs the funds a few days before completion. The mortgage purchase calculator helps you size the new mortgage once you know the equity coming out.
Frequently asked questions
What is a bridging loan in simple terms?
A short loan that lets you use the equity in the home you have sold to complete the purchase of your next home before the sale closes. It is repaid from the sale proceeds, usually within 90 to 120 days.
Do I need a firm sale to get a bridge loan?
From a bank, yes, in almost every case. RBC and Manulife Bank both require a firm sale agreement. Without one, the options are a HELOC arranged before you sell, a private lender, or an offer that is subject to the sale of your home.
How much does a bridge loan cost in Canada?
Ratehub puts typical bank bridge loans at prime plus 2% to 3% with an administration fee of about $200 to $500. On $250,000 for 46 days at 6.70%, the interest is about $2,111 (dated example, October 29, 2026).
How long can a bridge loan last?
It depends on the lender. TD says typically a maximum of 90 days, Manulife Bank up to 90 days, Ratehub says most lenders up to 120 days, and RBC describes terms from 90 days to 12 months or longer.
How much can I borrow with bridge financing?
Up to your net equity in the sold home: the sale price less the mortgage owing and estimated selling costs. Many lenders cap bridge loans around $200,000 and review larger amounts case by case.
What happens if my sale falls through?
You could end up carrying two mortgages until the home sells to someone else, which is why lenders want a firm sale. TD and Manulife Bank both flag this risk.
Sources
- RBC Royal Bank, What is bridge financing?, checked October 29, 2026 (firm sale requirement, term range).
- TD Canada Trust, Financing between homes, checked October 29, 2026 (90-day typical maximum, documents, equity-based amount, risk if the sale fails).
- Manulife Bank, What is bridge financing?, September 28, 2022 (90 days, interest-only, firm sale through a realtor, costs paid before release).
- Ratehub, Bridge financing, February 14, 2025 (prime plus 2% to 3%, $200 to $500 fee, up to 120 days, typical $200,000 cap, credit score).
- Insight Mortgage lender rate sheet, October 29, 2026 (prime 4.70%, HELOC prime plus 0.50%). Worked example: our own calculation, October 29, 2026.
Buying before you sell? Map the dates first
Send me your sale and purchase dates and a rough idea of the numbers, and I will lay out the bridge, the HELOC and same-day completion side by side, with costs, before you sign either contract. Book a free 30-minute call or phone 250-859-2100. Insight Mortgage, #200-1505 Harvey Ave, Kelowna.
