How do bridge loans work for sellers?
Want to buy a new house before your current one sells? Here’s the exact way bridge loans help Georgetown sellers move first and sell smarter.
Why sellers in Georgetown are choosing bridge loans now
Georgetown, ON has a competitive market. Low inventory and quick offers mean buyers have to act fast. Sellers who want to buy a new home before their current house closes face a timing problem. Bridge loans solve that. They let you access equity in your home immediately so you can make a competitive offer on your next place — without waiting for your sale to close.
This is not theory. It’s practical, tactical financing that puts you in control. Read the steps, costs, and local tips below and use them the same day.
What is a bridge loan (simple definition)
A bridge loan is a short-term loan that uses your current home’s equity as collateral to fund the down payment or purchase of a new property. Think of it as a financial bridge between the closing of your sale and the purchase of your next home.
Key features:
- Short-term (typically 30 days to 12 months)
- Interest-only or rolled-up interest payments
- Higher rates and fees than permanent mortgages
- Secured by the existing property equity
How bridge loans work for sellers — step by step (actionable)
- Check your equity quickly
- Ask your realtor for a recent market value estimate. In Georgetown, many homes have strong equity because demand outpaces supply.
- Subtract outstanding mortgage(s) and any known liens. The remainder is potential equity.
- Get a pre-approval for a bridge loan
- Talk to a bank, credit union, or private lender. They’ll calculate maximum loan-to-value (LTV) — often 70% to 90% of your equity portion, depending on the lender.
- Keep documentation ready: mortgage statements, recent appraisal or CMA (Comparative Market Analysis), ID, proof of income.
- Use the bridge to make an offer on the new home
- With funds available, you can make non-contingent offers that win in a tight Georgetown market.
- Structure offers to take advantage of quick closings or possession dates that fit your moving plan.
- Close the purchase and list/close the sale of your current home
- At closing, the bridge loan either gets rolled into your new mortgage or repaid from sale proceeds of your old home.
- Work closely with your lawyer to ensure liens and mortgages are discharged properly.
- Pay off the bridge loan
- Most sellers pay the bridge when the original property sells. If the sale closes first, proceeds discharge the bridge, then your new mortgage takes priority.
Cost and terms you must expect (don’t be surprised)
- Interest: Higher than long-term mortgages. Expect a premium for short-term flexibility.
- Fees: Appraisal, legal fees, broker fees, and a bridge setup fee.
- Interest structure: Often interest-only monthly or rolled into the loan balance.
- Term: 30–180 days is common, but lenders may extend to 12 months in special cases.
If your sale drags, fees add up. Plan for a worst-case scenario: what if your home doesn’t sell in time? Have a backup plan (extended bridge term, sell at a lower price, or rent out temporarily).
Bridge loan types sellers use in Georgetown
- Traditional bank bridge loans: Safer, lower rates but stricter underwriting and documentation.
- Private lenders: Faster approvals, more flexible terms, higher cost.
- HELOC or home equity loan: Cheaper than a bridge in some cases but may require you to have an existing line and lender willingness.
- Porting your mortgage: If your mortgage is portable, you can move the existing mortgage to the new property. That eliminates the need for a bridge, but not all mortgages are portable and conditions vary.
Mortgages and liens: what can block a bridge loan?
Lenders require clear title or predictable payout instructions. Common liens and how they affect funding:
- Mortgage liens: These are expected. Lenders will confirm pay-off amounts and order discharge instructions.
- Property tax arrears: Must be cleared or included. Municipal liens complicate closings.
- Construction/Builder’s liens: Dangerous. Unpaid contractors can place a lien that prevents clean title until settled.
- Condo common expense arrears: If fees are outstanding, lenders may refuse funding until cleared.
Pro tip: Order a title search early. In Ontario, your lawyer will search the land registry (Teraview) and flag any encumbrances that must be resolved before closing.
Local Georgetown specifics — do these things
- Use a Halton Hills real estate lawyer who knows Georgetown closings. Ontario land registry processes and builder’s lien laws are unique.
- Expect competitive offers in many neighbourhoods. A bridge lets you avoid contingent offers that lose out.
- Time your photography, staging, and MLS listing to hit the market during high-traffic windows to sell faster and reduce bridge days.
- Consider temporary price incentives if you need a quick sale date — but only after you calculate bridge costs versus discounting.
Risk checklist (what could go wrong and how to prevent it)
- Your home doesn’t sell in time: Have reserves to cover bridge interest. Or set bridge with an extended term.
- Title issues or liens prevent payout: Order title search and resolve liens before closing.
- New mortgage rates move higher: Lock in your new mortgage rate quickly or discuss rate hold options with your lender.
- Unexpected closing delays: Coordinate lawyers and lenders tightly — communication prevents most delays.
Alternatives to a bridge loan (when they make more sense)
- Port your mortgage if your lender allows and terms are good.
- Use a HELOC if you already have one with room available.
- Sell first, rent back: Sell your home, then rent it temporarily to buy the new one once you’re cash-ready.
- Contingent offer with shorter closing: In some neighborhoods, strategically timed contingent offers can still win.
How to choose the right lender in Georgetown
- Compare total cost, not just the interest rate. Include setup fees, appraisal, legal fees, and penalties.
- Ask for a clear repayment plan and what triggers repayment.
- Check how the lender handles liens and payout instructions in Ontario.
- Work with a mortgage broker who understands local banks and private lenders serving Halton Region.
Quick negotiation advantage for sellers using a bridge loan
Sellers with bridge financing can make strong, non-conditional offers. In Georgetown’s busy market, that advantage often translates directly into better purchase price or preferred possession dates. Use that power deliberately: make a clean offer and demand reasonable terms that protect you if your sale stalls.
Final play — the exact checklist before you sign a bridge loan
- Get a market value estimate and confirm equity.
- Order a title search with your lawyer.
- Get written bridge pre-approval and a detailed fee schedule.
- Confirm payout and discharge steps for existing mortgage(s).
- Build a contingency reserve equal to at least 1–3 months of bridge interest.
- Coordinate closing dates and communicate them to all parties.
FAQ — Bridge loans, mortgages, and liens for Georgetown sellers
Q: How much of my equity can a bridge loan access?
A: Lenders typically allow 70%–90% of available equity. Exact percentage depends on lender, credit, and local market conditions.
Q: Will an existing mortgage stop me from getting a bridge loan?
A: No. Lenders expect existing mortgages. They require payoff numbers and will structure the bridge around the current mortgage.
Q: How fast can I get a bridge loan approved in Georgetown?
A: If paperwork is ready, many lenders can approve in days. Private lenders can move fastest; banks take longer due to stricter checks.
Q: Do builder’s liens affect bridge loans?
A: Yes. Any lien on title must be resolved or addressed by the lender before funding. Always run a title search early.
Q: What are typical bridge loan costs?
A: Expect higher interest rates than standard mortgages, plus fees for appraisal, legal, and loan setup. Budget for interest-only payments if required.
Q: Is porting my mortgage better than a bridge loan?
A: If your mortgage is portable and terms are favorable, porting can be cleaner and cheaper. Confirm with your lender early.
Q: Can I use a bridge loan to buy a new home in Toronto while selling in Georgetown?
A: Yes. Bridge loans are regional neutral. Lender rules matter more than location. Ensure your lawyer and lender coordinate across jurisdictions if needed.
Need help now? Local action you can take today
If you’re selling in Georgetown and want to buy first, don’t guess. Get a clear equity estimate and a bridge pre-approval. Contact an experienced local realtor and lawyer who coordinate with lenders daily.
Tony Sousa is an experienced Georgetown realtor and mortgage-savvy advocate. If you want a no-nonsense evaluation of whether a bridge loan fits your plan, email tony@sousasells.ca or call 416-477-2620. Visit https://www.sousasells.ca for a fast market estimate and direct help.
Take control of your move. Use the bridge, not the stress.
