Products and terms
Bridge financing
Short-term borrowing that covers the gap when you take possession of a new home before the sale of your current one closes.
Possession dates rarely line up. Bridge financing lends you the equity from your sale for the days or weeks between buying and selling, so you don't have to line up 2 closings perfectly or move twice.
It's secured against the home you've sold and needs a firm, unconditional sale agreement. A conditional sale isn't enough, because the lender is relying on sale proceeds that have to arrive. Rates are higher than a mortgage, usually prime plus a spread, and there's normally a modest administration fee.
Because the loan lasts days, the cost is usually small in dollar terms. Bridging $150,000 for 3 weeks at prime plus 3% costs a few hundred dollars. That's far less than a failed possession or a second move.
Arrange it at the same time as your new mortgage, not in the final week. Lenders do bridge loans all the time, but they don't turn them around fast.
Related terms
Closing costs
The cash you need on possession day on top of the down payment, including legal fees, registration fees, adjustments, insurance and inspections.
Equity
The difference between what your home is worth and what you still owe on it.
Possession date
The day the property legally becomes yours and the mortgage funds, usually at noon on the agreed date in Alberta.
This definition describes how the term is used in Canadian residential mortgage lending. It’s general information, not advice on your file. Rules, thresholds and rates change. Where a figure is quoted, it’s current as of the date shown on the related guide.
Sharp rates. The full picture.
Ask Daniel about this term
Daniel De Sousa, Mortgage Associate, can walk you through it before you sign anything. Or get a rate quote: 6 questions, about two minutes, and no credit check to start.
No credit check, and no commitment.