Bridge Financing

Full Explanation

Bridge financing (also called a bridge loan or swing loan) is a short-term loan used to 'bridge' the financial gap when buying a new home before the sale of your current home closes. If your purchase closes June 1 but your sale doesn't close until June 30, you need 30 days of bridge financing to fund the purchase. Bridge loans in Canada are typically offered by major banks and are calculated as the equity in your current home, net of mortgages. They carry higher interest rates (prime + 2%–4%) and fees but are relatively low-risk since they're backed by real estate equity.