You've found the right place in Port Moody or finally pulled the trigger on a townhouse in Tsawwassen, but your current Burnaby condo isn't sold yet. Your new closing date is coming up, and your equity is still sitting in the old place. This is one of the most common and most stressful situations Metro Vancouver buyers run into, and a bridge loan is often what makes it work.
What a Bridge Loan Actually Does
A bridge loan is short-term financing that lets you close on your new purchase before the sale of your existing home completes. Your lender advances you the net equity from your current property so you can fund your new down payment, and then the bridge is repaid in full when your sale closes. It's a temporary loan, not a long-term mortgage product.
Most bridge financing in BC requires that you have a firm, accepted sale agreement on your current home. That's an important detail. If your existing property is still listed but not sold, most lenders won't bridge you. A conditional offer typically won't qualify either. The lender needs to know the money is coming, and when.
The scenario where bridging works cleanly looks like this: you've accepted an offer on your Coquitlam semi-detached, it's firm, closing is set for four weeks out, but your new Tri-Cities condo closes in two weeks. You need access to roughly $200,000 in equity for a few weeks to complete the new purchase. That's exactly what a bridge loan is designed for.
How the Costs Work and What to Expect
Bridge loans carry costs that are worth understanding before you commit. You're typically looking at two components:
- Interest on the bridged amount: Charged at a rate above prime for the days the bridge is outstanding. The total interest cost on a short bridge of two to four weeks is usually modest relative to the transaction, but it's not free.
- Administration or setup fee: Many lenders charge a flat fee to set up the bridge, which varies by lender and the size of the loan.
The shorter the gap between your two closing dates, the lower the total cost. A bridge outstanding for ten days costs far less than one sitting for sixty days. If your sale closes quickly after your purchase, many buyers find the all-in cost of bridging is a reasonable trade-off against the alternative, which is often losing the new property entirely.
One thing to flag: not every lender offers bridge financing. Some smaller lenders and monoline lenders that provide excellent mortgage pricing don't have a bridge product at all. If you're financing your new purchase through one of those lenders, you'd need to source the bridge separately, sometimes through your bank. This is worth sorting out early, not the week before closing.
When the Gap is Longer Than Expected
If your current home hasn't sold by the time you need to close on the new one, bridge financing is generally off the table. In that situation, a few other paths sometimes come up:
- Negotiating a later closing date on the new purchase, which requires the seller's cooperation and isn't always possible in a competitive Metro Vancouver market.
- Drawing on a HELOC against your existing property if you have one set up and enough available room, though this only works if the HELOC limit covers what you need.
- Revisiting your purchase to see whether it can be structured with less equity from the sale and more from other sources.
None of these alternatives are guaranteed to solve the problem, and each has its own qualification requirements and costs. The right answer depends on your specific numbers, both closing dates, and what your lender can actually support.
Why Sorting This Out Early Matters
Bridge financing is one of those mortgage topics that sounds simple until you're in the middle of a deal and realize the lender you chose doesn't offer it, or that the gap between your dates is longer than a bridge will cover. Getting into a buy-before-you-sell situation with a clear picture of your options ahead of time makes a real difference to how smoothly the whole thing goes.
If you're looking at a move in Metro Vancouver and you're not sure whether bridge financing fits your situation, it's worth talking through the specifics before you're up against a deadline.