Bridge Financing Buying Before You Sell

Found your dream home but haven’t sold your current one yet? Bridge financing can help. This short-term financing solution bridges the gap between buying your new home and selling your existing one — eliminating the stress of perfect timing.

How Bridge Financing Works

Bridge financing is a short-term loan that provides the funds you need for your new home’s down payment before your current home sells. Here’s the typical scenario:

You find a new home and make an offer
Your offer is accepted, but your current home hasn’t sold yet
You need the equity from your current home for the new down payment
Bridge financing provides those funds until your current home closes
When your current home sells, the bridge loan is repaid

When Bridge Financing Makes Sense

Firm sale on your current home: You’ve accepted an offer, but closing is after your new purchase
Strong market: Your current home will sell, you just need time
Must-have opportunity: The new home won’t wait for your sale
Relocation: Job starts before you can sell

90

Days max (typical)

Prime+

Interest rate range

Types of Bridge Financing

Closed Bridge (Firm Sale)

If you have a firm, accepted offer on your current home with a closing date, most lenders will provide bridge financing at reasonable rates. The risk is low because your sale is confirmed.

Open Bridge (No Sale Yet)

If you haven’t sold your current home yet, bridge financing is harder to obtain and more expensive. Some lenders won’t offer it at all; others require substantial equity and charge higher rates.

💡 Reducing Risk

If possible, sell your current home before buying. Bridge financing works, but timing risk remains. If your current home’s sale falls through, you could be stuck with two mortgages. Consider including a condition in your purchase offer that your sale closes successfully.

Costs and Considerations

Bridge financing isn’t free. Expect:

Interest rate: Higher than your regular mortgage (Prime + 2-4%)
Setup fees: Some lenders charge administrative fees
Legal costs: May require separate legal work
Time pressure: Must repay when your current home sells

For most buyers, the cost is worth the flexibility. A few hundred dollars in interest is a small price to avoid losing your dream home.

Alternatives to Bridge Financing

Sale Condition

Make your offer conditional on selling your current home. Works in slower markets, but sellers may prefer unconditional offers in competitive situations.

Extended Closing

Negotiate a longer closing period on your purchase to give time to sell your current home.

HELOC

If you have a HELOC on your current home, you may be able to use it for the down payment without formal bridge financing.

Elevation Mortgage
INDEPENDENT MORTGAGE BROKERS · LICENSED AB & BC

Julie & Andy Jeffery — independent mortgage brokers serving Calgary, Nelson BC,
and clients across Alberta and British Columbia.