Bridge Financing: How to Buy Before You Sell in Metro Vancouver

Buying your next home before your current one closes usually comes down to one problem: your down payment is sitting in home equity you can't access until the sale funds. Bridge financing exists to solve exactly that gap, but it's not automatic, it isn't free, and it isn't the only way to buy before you sell.

How bridge financing works

A bridge loan is a short-term loan that advances funds against the equity in your current home before its sale actually closes, so you can cover the down payment and closing costs on a new purchase without waiting on your existing sale to fund. Per RBC's description of the product, it lets you carry the new purchase forward and repay the bridge loan in full once your existing home's sale closes and the proceeds come through, typically a matter of weeks later, not months.

What lenders actually require

The single biggest requirement is a firm sale agreement on your current home, an unconditional agreement, not just a listing or an offer that's still subject to financing or inspection on the buyer's side. Beyond that, lenders typically want:

• Confirmed closing dates for both the sale and the purchase
• Proof of sufficient equity remaining in your current home
• Mortgage approval already in place for the new purchase
• Standard financial documentation, proof of income, a credit check, and confirmation of your residual equity position after the bridge loan is repaid

Without a firm sale in hand, most lenders won't approve bridge financing, the whole structure depends on there being a real, closing transaction to repay the loan from.

What it actually costs

Bridge loans are generally structured as interest-only for the loan period, meaning you pay interest during the bridge but don't make regular mortgage-style principal payments on it. The rate is higher than a conventional mortgage rate, reflecting the short-term and higher-risk nature of the product, and lenders commonly add an administrative or setup fee on top of the interest. Exact rates and fees vary meaningfully by lender and by your specific situation, get a full, itemized cost breakdown from your bank or mortgage broker before committing, rather than relying on a generic figure.

How long a bridge loan typically lasts

Terms vary by lender, but bridge financing is generally structured as a short-term solution, commonly in the range of roughly 90 days up to about six months, sized to the actual gap between your purchase completion date and your existing sale's closing date. The shorter that gap, the less the bridge loan ultimately costs you in interest.

The real risk to understand

Bridge financing means taking on debt against a sale that hasn't closed yet. Lenders manage their side of that risk by requiring a firm, unconditional sale agreement before approving the loan, but the underlying risk doesn't disappear for you as the borrower. If something unusual happened and your buyer failed to complete, you'd still be responsible for the bridge loan and your new purchase without the sale proceeds you were counting on. This is uncommon once a sale is firm, but it's the reason lenders are strict about the "firm" requirement rather than accepting a listed or conditionally-accepted offer.

Alternatives to consider

Bridge financing isn't the only way to buy before you sell:

• A subject-to-sale offer lets you make an offer on your next home conditional on successfully selling your current one, avoiding bridge financing costs entirely. The tradeoff is that it's a weaker offer from a seller's point of view, and less likely to be accepted in a competitive listing.
• A rent-back (leaseback) arrangement lets you sell your current home first, then stay in it as a tenant for an agreed period after closing while you find and complete your next purchase, using proceeds you've already received rather than borrowing against a sale that hasn't closed. This depends on your buyer agreeing to the arrangement, so it's worth raising early in negotiations rather than after the fact.
• Timing your closing dates to align, negotiating a longer completion period on your sale, or an earlier one on your purchase, so the two land closer together, can sometimes shrink or eliminate the gap a bridge loan would otherwise need to cover.

Which option makes sense depends on how competitive the market is for both your sale and your purchase, and how much certainty you need on both sides of the transaction, worth talking through with your realtor and mortgage broker together before you commit to a strategy.

A simple example of how the numbers flow

Say you've accepted a firm offer on your current home, closing in six weeks, and you want to complete on a new purchase in three weeks, a three-week gap where you technically own (or are closing on) both properties. A bridge loan sized to cover the down payment and closing costs on the new home would be advanced at your new purchase's closing, carried for roughly those three weeks at an interest-only rate, and then repaid in full, principal plus accrued interest and any lender fee, the moment your existing home's sale actually closes and funds. The shorter that gap, the smaller the total interest cost; a three-week bridge costs meaningfully less than a three-month one, which is part of why aligning your two closing dates as closely as possible is worth negotiating for even if you end up needing a bridge loan regardless.

How this typically comes together with your realtor and lender

In practice, bridge financing works best as a coordinated plan rather than a last-minute scramble. Once you have a firm, unconditional sale on your current home, that's the moment to go back to your lender (ideally the same one, since bridging is often easier to arrange with the institution already holding or approving your new mortgage) and formally request the bridge loan, providing the firm sale agreement, the new purchase contract, and updated financial documentation. Because approval depends on having that firm sale in hand, sequencing matters: a buyer who writes an offer on their next home before their current home is firmly sold is taking on timing risk that bridge financing specifically can't solve until that sale is locked in.

This is also a good moment to loop in your realtor on closing date negotiation on both sides of the transaction, a seller negotiating your purchase contract, and a buyer negotiating your sale contract, both have some flexibility on completion dates, and narrowing the gap between them is one of the most direct ways to reduce what a bridge loan ends up costing you.

When bridge financing tends to make the most sense

Bridge financing tends to be the right tool specifically when the gap between your two closings is short and largely unavoidable, for example, your buyer needs a completion date that doesn't line up with the possession date on the home you're purchasing, despite good-faith negotiation on both sides. It's a less attractive option when the gap is long, since interest accrues the entire time, or when you have another reasonable way to bridge the timing, such as sufficient savings outside your home equity to cover the down payment without borrowing against a sale that hasn't closed yet. Talking through your specific timeline with a mortgage broker before you're under offer, rather than after, gives you the clearest picture of whether bridge financing, a subject-to-sale offer, or a rent-back arrangement fits your situation best.

What this comes down to

• Bridge financing advances equity from a not-yet-closed home sale so you can complete a new purchase without waiting for that sale to fund.
• Lenders require a firm, unconditional sale agreement on your current home, plus confirmed closing dates and proof of adequate residual equity.
• Expect interest-only payments at a higher rate than a standard mortgage, plus an administrative fee, get exact terms from your lender rather than assuming a fixed figure.
• The underlying risk is a sale that fails to complete after you've already committed to bridge financing and a new purchase, rare once a sale is firm, but the reason lenders insist on "firm."
• Subject-to-sale offers and negotiated rent-back arrangements can reduce or avoid the need for bridge financing altogether, depending on how competitive your market is on both sides.

This article is general information, not financial advice. Bridge financing terms, rates, and fees vary by lender and by your individual circumstances, confirm current details with a mortgage broker or your bank before relying on any specific figure.

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