Bridge Financing in Canada: What the Gap Between Closing Dates Actually Costs
On a 15-day closing gap the $500 set-up fee is 45% of what a bridge loan costs you, which means the fee, not the rate, is the number to negotiate.
Friday, October 9, 2026 — the bottom line: bridge financing in Canada is priced off prime, and prime is 4.45%. Lenders add a published premium of roughly two to five percentage points, so a bank bridge loan today sits between 6.45% and 9.45%, plus a set-up fee that typically runs $250 to $500. Interest accrues per day, not per month. On a $200,000 bridge over a 15-day closing gap at an illustrative 7.45%, you pay $612.33 in interest and $500 in fees — and that fee is 45% of your total cost. The rate on the sign is not what you should be shopping.
Market rates below are as of today unless dated otherwise. Lenders do not publish bridge pricing, so the specific bridge rates modelled here are illustrative assumptions built on sourced premium ranges over today's prime, not quotes.
How bridge financing works in Canada
Bridge financing is a short-term loan covering the gap between the day you close on your new home and the day the money from your old home arrives. If you take possession on the 15th and your sale completes on the 30th, you need your down payment fifteen days before you have it. The bridge covers those fifteen days, then your lawyer repays it in full out of the sale proceeds.
Three documents have to exist first: a firm agreement of purchase and sale on the home you are buying, a firm agreement of purchase and sale on the home you are selling, and a letter of direction authorising your lawyer to pay the bridge out of the sale proceeds. That third piece is why the loan is cheap relative to its risk. The lender is not relying on your income, it is relying on a sale that is already legally binding.
Bridge financing is not a second mortgage and not a line of credit you draw on at will. It is a single advance with a known payoff date, usually registered against the property you are selling. Most lenders write it for up to 90 days; some alternative lenders go to six months or longer, at a price.
What bridge financing costs today
Start with the verified numbers, because every bridge quote you get is built on them.
| Figure | Value | As of |
|---|---|---|
| Bank of Canada policy rate | 2.25% | Held Sept 2, 2026 |
| Prime rate | 4.45% | Oct 9, 2026 |
| Next Bank of Canada decision | Oct 28, 2026 (with Monetary Policy Report) | Scheduled |
| Best 5-year fixed, insured | 4.34% | Oct 9, 2026 |
| Best 5-year fixed, conventional | 4.44% | Oct 9, 2026 |
| Best 5-year variable, insured | 3.25% | Oct 9, 2026 |
| 5-year Government of Canada bond yield | 3.60% | Oct 7, 2026 |
| CPI inflation, year over year | 3.0% | August 2026, released Sept 14 |
| Unemployment rate | 6.4% | August 2026, released Sept 4 |
Prime has not moved since the Bank of Canada cut to 2.25% in October 2025, and the Bank has held since. Because bridge financing floats on prime, your quote moves when prime moves and not otherwise. The next scheduled opportunity for that is the October 28 decision, and market expectations about it can change at any time.
Interest on a bridge is simple per-diem: the loan multiplied by the annual rate, divided by 365, multiplied by the days. No amortisation, no compounding, which makes it unusually easy to check. At an illustrative 7.45% — prime plus three points, inside the sourced range — the interest alone comes to this.
| Bridge amount | 5 days | 15 days | 30 days | 60 days | 90 days |
|---|---|---|---|---|---|
| $150,000 | $153.08 | $459.25 | $918.49 | $1,836.99 | $2,755.48 |
| $200,000 | $204.11 | $612.33 | $1,224.66 | $2,449.32 | $3,673.97 |
| $350,000 | $357.19 | $1,071.58 | $2,143.15 | $4,286.30 | $6,429.45 |
| $500,000 | $510.27 | $1,530.82 | $3,061.64 | $6,123.29 | $9,184.93 |
Those are smaller numbers than most people expect. This is the part borrowers get right.
On a short gap, the set-up fee is the loan
Here is the part borrowers get wrong, and it is the most useful thing to understand about bridge financing. Interest scales with the number of days. The set-up fee does not — it is the same $500 whether your gap is five days or ninety. The shorter the gap, the more the fee dominates, and the worse your effective cost of borrowing becomes.
Take the same $200,000 at the same illustrative 7.45%, add a $500 set-up fee, and annualise the whole cost.
| Gap | Interest | Set-up fee | Total cost | Fee as share of cost | Effective annualised cost |
|---|---|---|---|---|---|
| 5 days | $204.11 | $500.00 | $704.11 | 71.0% | 25.70% |
| 15 days | $612.33 | $500.00 | $1,112.33 | 45.0% | 13.53% |
| 30 days | $1,224.66 | $500.00 | $1,724.66 | 29.0% | 10.49% |
| 60 days | $2,449.32 | $500.00 | $2,949.32 | 17.0% | 8.97% |
| 90 days | $3,673.97 | $500.00 | $4,173.97 | 12.0% | 8.46% |
A five-day bridge quoted at 7.45% actually costs 25.70% a year. A ninety-day bridge at the same posted rate costs 8.46%. The cost curve runs backwards from what you would assume, and it does so entirely because of a fixed fee.
Two consequences follow. On a short gap, negotiate the fee, not the rate: moving the rate from 7.45% to 6.45% on a 15-day $200,000 bridge saves about $82, while getting the fee from $500 to $250 saves $250 — three times as much, for one question. On a long gap, do the opposite. At 90 days the rate is 88% of your cost and the fee barely registers. The same pattern holds on a larger loan: on $350,000 over five days the fee is 58.3% of the cost and the effective rate is 17.88%, but stretched to 90 days it falls to 8.03%.
How much bridge financing you can get is set by your net equity
Lenders do not bridge against your sale price. They bridge against what is left after the sale pays everyone else, and most advance up to about 90% of those net proceeds. Selling at $900,000 with $505,000 owing, commission at 4%, and $2,200 in legal costs:
- Sale price: $900,000
- Less existing mortgage: $505,000
- Less commission at 4%: $36,000
- Less legal and closing costs: $2,200
- Net proceeds: $356,800
- Lender cap at 90% of net: $321,120
If the down payment you owe on the new purchase is $215,000, you are comfortably inside the cap. At $340,000 you are not, and you would have to find the difference elsewhere. Run this before you make an offer with a mismatched closing date; commission is usually the largest deduction in it.
A bridge also does nothing to reduce the mortgage you are qualifying for on the new home. At today's best insured 5-year fixed of 4.34%, a $500,000 mortgage on a 25-year amortisation runs $2,723.07 a month using Canadian semi-annual compounding; at the conventional 4.44% it is $2,750.71. The bridge is a two-week problem. The mortgage is a five-year one.
A conditional sale is what kills bridge financing
The most common reason a bridge application fails is that the sale of the current home is still conditional — on financing, on an inspection, on the buyer selling their own property. A conditional sale is not sufficient. Until the conditions are waived there is no binding sale to lend against, and a mainstream lender will decline.
If you are already committed to a purchase closing and your conditions have not cleared, your options narrow to alternative lenders. Illustratively — again, not quotes — a private bridge at 9.95% with a 2% lender fee over 90 days on $200,000 runs about $4,906.85 in interest plus $4,000 in fees, roughly $8,907, against about $4,174 for a bank bridge over the same period. The spread is near $4,700 for the same ninety days. At 11.95% with a 3% fee the total approaches $11,900.
That is the real price of a conditional sale. If you are heading that way, read how private mortgage pricing is actually built and where the line between A, B and private lenders falls, so you can tell a fair alternative quote from an opportunistic one. Borrowers already in B-lender territory on the new mortgage should expect the bridge to be priced off that relationship too.
What bridge financing is really competing against
Borrowers compare bridge financing to zero, as though the alternative were free. The alternative is aligning your closing dates, and alignment has a price that is usually larger and always less visible.
There are two ways to align. You can concede on price to get the date you need — and on a $900,000 sale, half a percentage point is $4,500, four times the cost of a 15-day bridge and 2.6 times a 30-day one. Or you can sell first and rent, which on a modest estimate means a month's rent around $2,600, a second move of roughly $3,800, and storage of about $450 — call it $6,850, plus moving twice.
Against either, bridge financing at $1,112 for fifteen days is the cheap option. That is the correct frame: bridge financing is not debt you took on badly, it is insurance against a more expensive concession. A third hidden cost is worth naming — rushing a closing date can push you into a worse-priced term, and moving from 4.34% to 4.64% on $500,000 costs $83.35 a month, or $1,000.17 a year, every year of the term. A bridge costs you once.
How to set up bridge financing without surprises
- Ask for the set-up fee and the per-diem rate as two separate numbers, in writing, before you accept. A quote that gives you only a rate is incomplete.
- On a gap under 30 days, negotiate the fee first. It is the larger lever by a wide margin.
- Calculate your net proceeds — sale price less mortgage, commission and legal costs — and confirm 90% of that covers the down payment you owe.
- Arrange the bridge with the lender funding your new mortgage. Separate lenders mean a second set of fees and a slower lawyer.
- Get your sale conditions waived before you count on a bridge, and give your lawyer the expected payout date in writing.
- Ask what happens if the sale is delayed past 90 days. Most lenders require monthly interest payments at that point, and some reprice.
- Do not set the gap longer than you need out of caution. Every extra day is per-diem interest, and on a long gap the rate is what hurts.
Common questions
Do I need to qualify for bridge financing the way I do for a mortgage?
Generally the lender's focus is the firm sale agreement and your net proceeds rather than a fresh income assessment, because the repayment source is a binding sale rather than your cash flow. The bridge is normally arranged alongside the new mortgage, which you do have to qualify for in full. Requirements vary by lender, so confirm yours in writing.
What happens if my sale falls through after the bridge is advanced?
The loan does not disappear. You become responsible for servicing it, typically with monthly interest payments, and the lender will want a plan for repayment — usually a relisting or a refinance. This is the scenario that makes a firm, unconditional sale the non-negotiable part of bridge financing.
Is a HELOC a cheaper way to cover the gap?
Sometimes, if you already have one with room on it, since a line of credit avoids the set-up fee that dominates short gaps. But a HELOC has to be registered and approved in advance, and most lenders will not grant new room against a home under a firm agreement of sale. If the line already exists, price both. If it does not, you will not have time to put one in place.
One caution on the figures above. Prime, mortgage rates, bond yields and the economic readings are verified as of the dates shown. The specific bridge rates — 7.45%, 9.95% and 11.95% — are illustrative assumptions built on sourced premium ranges over today's prime, not market quotes, because lenders do not publish bridge pricing. Rates, fees and lender policies change, and nothing here is an approval or a promise of a particular rate.
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