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What is Bridge Financing?

Many mortgage lenders in Ontario offer bridge financing. Bridge financing is a temporary loan that helps homeowners “bridge” the gap between the sale of their existing home's closing date and the purchase of their new home. In order to be approved for most bridge financing loans you must have a firm sale agreement.

For example: - Your down payment is coming from the sale of your current home - Your current house has been sold firm and closes on July 25th 2022 - You already purchased your new home and it closes on July 15th 2022 - Since your purchase closes 10 days sooner than your sale you will most likely need a loan for your down payment and closing costs. Some mortgage lenders will provide you this loan/bridge financing with minimal costs. Interest is typically charged daily so it is ideal to have a short time period between your purchase and sale. You may need the bridge financing for just a couple of days, or maybe even a few weeks. Personally, I do not recommend longer bridge financing loans if it is avoidable. - Sometimes clients purposely put the closing of their current house later than the closing of their new purchase to give them extra time to move in or do small improvements like painting. - If you match up your closing dates so that both your purchase and sale close on the same day then bridge financing will not be required.

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