Bridge financing
Buying before your sale closes
When you take possession of a new home before your current one sells, a bridge loan covers the gap. Put in both closing dates and see what it costs.
The home you are buying
The home you are selling
$37,500 of $750,000
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The plain-English version
Add both closing dates to get the bridge cost. Without them there is no overlap to price.
Bridge loans, answered
What is a bridge loan?
A bridge loan is short-term financing used when you take possession of a new home before your current home sells. It covers the down payment that is still tied up in the home you are selling. It is repaid in one lump sum the day your sale closes.
How much does a bridge loan cost?
Cost is interest on the bridged amount for the number of days between the two closings, plus any lender fee. Interest is the bridge amount times the annual rate times the days divided by 365. There are no monthly payments.
Do I make monthly payments on a bridge loan?
No. Interest accrues over the bridge period and the full amount is repaid in a single lump sum from the proceeds when your current home sells.
Does the sale of my home need to be firm?
Lenders need an unconditional, firm sale before they will commit a bridge loan. You can estimate the cost before the sale goes firm, but the financing remains conditional on it.
Can a bridge loan cover my land transfer tax?
Land transfer tax and the lawyer are due in cash on closing day. If that money is still tied up in the home you are selling, those costs can be included in the bridge. Whether they are depends on the lender and your file.
Estimate only, not financial or legal advice. Interest is the bridge amount times the rate times the number of days divided by 365, repaid in one sum when your sale closes. Final approval, rate and fees depend on the lender and on firm sale and purchase agreements.