Bridge Loan explained
A bridge loan provides temporary funds, usually for a few weeks up to a few months, so you can complete the purchase of a new home when its closing date falls before the closing date of your current home's sale. It bridges the timing gap, drawing on the equity tied up in your soon-to-be-sold property.
In Canada, bridge financing is typically offered by the same lender providing your new mortgage and is secured against the equity in your existing home. Because it is short-term and convenient, the interest rate is usually higher than a regular mortgage, often prime plus a premium, and there may be an administration fee. It generally requires a firm, unconditional sale agreement on your current home.