BRIDGE FINANCING — HOW IT REALLY WORKS
- johnathanmcquoid
- Jan 18
- 3 min read
Real estate rarely goes according to plan.
In a perfect world, you’d take possession of your new home before moving out of your old one — giving you time to paint, renovate, or move at your own pace.
But most buyers need the money from their current home sale to fund the down payment on their next home.
That’s where bridge financing comes in.
🏠 What is bridge financing?
Bridge financing allows you to access the equity in your current home before it closes.
This temporary loan helps you cover:
✔️ the down payment on your new home
✔️ closing costs
✔️ moving or renovation expenses
It “bridges” the gap between the firm sale of your existing property and the firm purchase of your new one.
🔐 You MUST have a firm sale to qualify
This is where many people get confused.
To qualify for bridge financing, you must have:
✔️ a firm purchase agreement
✔️ and a firm sale agreement
“All subjects removed” is required.
If your current home isn’t sold yet, lenders can’t calculate how much equity you have or whether you can afford two properties temporarily.
No firm sale = no bridge financing.
📉 Why sellers should sell first
Unless you qualify to carry two mortgages at the same time, it’s usually better to sell first.
Here’s why:
• Your home is only worth what a buyer will pay today — not yesterday’s price or tomorrow’s guess.
• You need the proceeds from your sale to fund your new down payment.
• Unexpected market shifts can leave you short on closing day.
Selling first reduces stress, risk, and uncertainty.
🚧 When bridge financing is your best option
If your existing home is sold — but its closing date is after the closing date of your new purchase — then bridge financing is usually the best solution.
Keep in mind:
✔️ Not all lenders offer bridge loans
✔️ We can match you with lenders that do
✔️ Bridge loans usually cost Prime + 2% to 4%
✔️ Administrative fees apply
✔️ Bridge terms are typically up to 90 days
It’s temporary, convenient, and often worth the short-term cost.
⚠️ What if your home hasn’t sold yet?
If you’ve already bought and your new home is closing soon — but your current home still hasn’t sold — a bank cannot offer bridge financing.
In this case, private lending may be required.
💰 Private financing as a last resort
Private bridge loans:
✔️ require sufficient home equity
✔️ come with higher rates (7%–15%+)
✔️ include lender + broker fees
✔️ are short-term only
Yes, private lending is expensive…
…but it may still cost less than dropping your home’s list price by tens of thousands of dollars just to get it sold quickly.
💡 Final Thought
Bridge financing and private bridge loans exist for one reason:
To protect you when your buying and selling timelines don’t line up.
Don’t stress trying to figure it out alone — message The Frontline Mortgage Group. We’ll review your dates, run the numbers, and help you choose the safest and most cost-effective solution. 💬