Bridge Financing Calculator

What the Bridge Financing Calculator does

Your purchase closes on the 15th and your sale closes on the 30th. The down payment for the new place is sitting in the equity of the old one, and it will not be released in time. A bridge loan covers that gap, and this works out what it costs.

It prices the loan the way lenders actually charge it — simple daily interest, no compounding, repaid in full the day your sale completes — and sizes it against the equity you genuinely have available rather than the amount you would like. It also puts the disqualifier first: bridge financing needs a firm, unconditional sale. Without one, the numbers describe a loan you cannot get, and the page says so rather than letting you plan around it.

• The amount you can bridge, capped by your real net sale proceeds
• Interest on simple daily terms, plus the flat fees on top
• Two cost-per-day figures — what an extra day costs, and what the whole gap averages
• What happens to the cost if either closing date moves
• The cost of carrying both homes during the overlap, which is usually the larger number

Two things people get wrong about bridge loans

Both of these push in the same direction: worrying about the wrong number.

The first is the rate. A bridge is priced at prime plus two to five points, which sounds alarming next to a mortgage rate. But the loan lives for weeks, so the rate has almost no time to do damage. On a 15-day bridge, knocking a full percentage point off the rate saves less than a hundred dollars — while the flat admin fee runs to several hundred and does not move at all. If you are going to negotiate something, negotiate the fee.

The second is the bridge loan itself. During the gap you own two homes. You service both mortgages, pay two sets of property taxes, two insurance policies and two utility bills. On a typical file that double carry is several times the entire cost of the bridge. It is the number people have not budgeted for, and it is the reason a two-week gap is worth far more effort to avoid than the bridge interest alone suggests.

• The number of days drives your cost far more than the rate does
• On a short bridge the flat fees exceed the interest — negotiate those instead
• Owning both homes during the overlap usually costs more than the bridge loan
• Aligning the two closing dates removes the problem entirely, and is free to ask for
• A bridge is normally only offered alongside the new mortgage from the same lender

How bridge financing is actually calculated in Canada

A bridge loan is not amortized. There is no payment schedule and nothing compounds, because the loan is drawn once, sits for a fixed number of days, and is repaid in a single lump when your sale closes. Applying a mortgage formula to it would overstate the cost.

The interest is one line: bridge amount × annual rate × (days ÷ 365). Add the lender’s administration fee and your lawyer’s fee for registering the bridge, and that is the total.

Sizing the loan is the part with a real constraint. A lender will advance against equity that is firmly under contract to be realised, and no more. Your sale price less your outstanding mortgage less your selling costs sets a hard ceiling, however much your purchase needs. If your down payment requirement is above that ceiling, the difference has to come from somewhere else — a bridge cannot stretch to cover it.

• Net proceeds: sale price − mortgage balance − selling costs
• Bridge amount: the lesser of what you need and what your net proceeds support
• Interest: bridge amount × rate × (days ÷ 365), simple, never compounded
• Total: interest + administration fee + legal fee
• Each extra day: bridge amount × rate ÷ 365 — the fees do not change

What a lender checks before approving one

Bridge financing is one of the more straightforward approvals in Canadian lending, but it turns on a small number of things and one of them is absolute.

• A firm, unconditional sale — the gate everything else depends on. A conditional offer, subject to financing or inspection or anything else, generally cannot be bridged against, because the lender has no certainty the repayment will arrive.
• Net proceeds covering the advance — the loan is secured against the equity in the home you are selling, so that equity sets the maximum regardless of your purchase price.
• The length of the gap — most lenders will bridge up to about 120 days and many stop at 90. A longer gap generally needs a private second mortgage instead, at materially higher cost.
• The new mortgage in place — a bridge is almost always written by the lender funding your purchase, as an accommodation on that file. It is rarely available on its own from a third party.

Using your results well

If your sale is firm and your proceeds cover the down payment, bridging is usually the cheapest and simplest way through a date mismatch, and the total is often smaller than people brace for. Confirm the administration fee in writing, since it is the line most worth questioning on a short bridge.

Enter both mortgage payments to see the double carry. That is the figure to budget against, not the bridge interest — and seeing it is often what persuades people to push harder on aligning the dates in the first place.

If your sale is not yet firm, or your proceeds fall short, treat the bridge as unavailable until that changes. The usual fallback is a private or second mortgage, which does not require a firm sale but costs considerably more once lender and broker fees are counted. That is worth pricing before you commit to a purchase closing that assumes bridge money will be there.

• Confirm the sale is firm before assuming a bridge is available at all
• Question the administration fee — on a short bridge it outweighs the rate
• Use the cost-per-day figure whenever a closing date is being negotiated
• Enter both payments to see the double carry, and budget against that total
• If the gap runs past 90 to 120 days, ask your lender before relying on a bridge