Bridge Loans in Ontario

What is a bridge loan in Ontario?

A bridge loan in Ontario is a short-term secured loan that covers the financial gap between your new home's closing date and the date your existing home sale closes, regulated under the Mortgage Brokerages, Lenders and Administrators Act, 2006 (MBLAA) and overseen by the Financial Services Regulatory Authority of Ontario (FSRA). Unlike most consumer loans in Ontario, bridge loans are not governed by the Consumer Protection Act. They fall under the MBLAA, which requires all mortgage brokerages and lenders to be licensed with FSRA, disclose the full cost of borrowing including all fees, and accurately calculate your annual percentage rate. FSRA initiated 100 enforcement actions in 2024-25, with particular focus on private mortgage suitability and accurate APR disclosure. In a typical Ontario scenario, you find your next home, make an offer, and lock in a closing date before your current home sells. Your equity is real but not yet liquid. A bridge loan converts that equity into cash so your purchase closes on time. The Ontario market makes this common. The GTA averaged $1,009K per home in early 2026, and Ottawa averaged $693K. At those price points, even a few weeks of financing gap requires a substantial bridge. In Toronto specifically, buyers also face the combined Ontario and Toronto land transfer taxes (up to $32,950 on a $1M purchase), which increases how much cash you need at closing and can affect how large a bridge loan you require. Bank bridge loans in Ontario require a firm, unconditional sale agreement on your existing home before funds are released. Ontario credit unions such as Meridian (378,000+ members), DUCA, and Alterna may offer more flexible qualifying terms. Private Ontario lenders including Tembo Financial, DV Capital, Clover Mortgage, and Burke Financial approve bridge loans without a firm sale, typically within 48 hours, but charge higher rates and fees to reflect the added risk. The federal criminal interest rate cap, reduced to 35% APR as of January 1, 2025 under Criminal Code, Section 347, protects Ontario borrowers from predatory bridge lending rates. Any bridge loan exceeding 35% APR is a federal criminal offence.

What types of bridge loans are available in Ontario?

• Bank bridge loans, offered by the Big 5 banks (TD, RBC, Scotiabank, BMO, CIBC) to existing mortgage clients. These carry the lowest rates at prime + 2% to 4% (roughly 6.45% to 8.45% at current Bank of Canada rates), but require a firm, unconditional sale agreement on your existing home and a maximum term of 90 to 120 days
• Ontario credit union bridge loans from lenders such as Meridian, DUCA, and Alterna Savings. Credit unions regulated by FSRA often provide more flexible terms than the major banks and may consider applications with conditional sale agreements depending on your overall financial profile
• Private bridge loans for Ontario borrowers who do not have a firm sale or who do not qualify with a bank. Private lenders including Tembo Financial, DV Capital, Clover Mortgage, and Burke Financial offer bridge financing from $30,000 to $2M+, with approval in as little as 48 hours, at rates of 8% to 12% plus lender fees of 3% to 6%
• Open bridge loans with no fixed repayment date within the maximum term. These are useful when your existing home's sale closing date is not yet confirmed, and carry slightly higher rates than closed bridge loans
• Closed bridge loans with a specific repayment date tied to your confirmed sale closing. These carry lower rates because the lender has certainty on repayment timing
• New construction bridge loans for Ontario buyers purchasing a pre-construction home or new build while their existing home is still on the market. Between April 2026 and March 2027, the Ontario government has temporarily eliminated the 13% HST on new homes under $1M, which reduces the cash needed at closing and may reduce the bridge amount required

Who qualifies for a bridge loan in Ontario?

• ✓Ontario resident at least 18 years of age with valid government-issued photo identification
• ✓Sufficient equity in your existing Ontario home. Lenders calculate available equity as the confirmed sale price (or appraised value) minus the outstanding mortgage balance and estimated closing costs including Ontario land transfer tax
• ✓A signed purchase agreement on your new home confirming the closing date and the amount of bridge financing required
• ✓For bank and credit union bridge loans: a firm, unconditional sale agreement on your existing home. Private lenders may waive this requirement
• ✓A credit score of 650 or higher for bank and credit union bridge loans. Private lenders focus primarily on property equity and may approve borrowers with lower credit scores at higher rates
• ✓Verifiable income sufficient to carry your existing mortgage and the bridge loan interest payments simultaneously during the overlap period
• ✓Homeowner's insurance on both properties active during the bridge period
• ✓No active bankruptcy or undischarged consumer proposal

What do bridge loans cost in Ontario?

In Ontario, bank bridge loans cost prime + 2% to 4% in interest (approximately 6.45% to 8.45% at the current prime rate of 4.45%), while private bridge lenders charge 8% to 12% with additional fees of 3% to 6% of the loan amount. Legal fees to set up the bridge loan typically add $800 to $1,500 on top of the lender's costs. Bridge loan amounts in Ontario typically range from $25,000 to over $2,000,000, depending on the equity in your existing home. Most lenders advance up to 80% of available equity, calculated as the confirmed sale price minus the outstanding mortgage balance and closing costs. Worked example: GTA move-up buyer Purchasing a $1,009K GTA home while selling an existing $800K home with a $400K mortgage outstanding: - Available equity: $800K minus $400K minus closing costs (~$16,475 Ontario LTT + $16,475 Toronto MLTT + $15K legal and real estate) = approximately $352K - Bridge loan amount: up to ~$350K - Bank bridge interest at 7.5% over 90 days: $6,563 - Legal fees: $1,000 to $1,500 - Total estimated cost: $7,563 to $8,063 Worked example: Ottawa upsizer Purchasing a $693K Ottawa home while selling a $550K home with a $300K mortgage: - Available equity: $550K minus $300K minus closing costs (~$8,475 Ontario LTT only + $12K other costs) = approximately $229K - Bridge loan amount: up to ~$225K - Bank bridge interest at 7.5% over 90 days: $4,219 - Total estimated cost: $5,500 to $6,500 Important: if you are buying in Toronto, the combined Ontario LTT and Toronto MLTT on a $1M purchase totals $32,950. This is a closing cost paid from your own funds, not typically included in the bridge loan, but it must be factored into your cash planning alongside the bridge financing. The Bank of Canada held its policy rate at 2.25% through early 2026, keeping bridge loan rates historically reasonable. Interest on bridge loans for your primary residence is not tax-deductible in Canada. If the bridged property is an investment or rental, consult a tax advisor regarding potential deductibility. All lenders licensed under the MBLAA are required by FSRA to disclose the full cost of borrowing, including all fees and the APR, before you sign. Never proceed with a bridge lender who cannot provide this in writing.

Pros and cons of bridge loans in Ontario

Bridge loan options in Ontario compared

Tips for Ontario bridge loan borrowers

1. 1.Verify your lender or broker is licensed with FSRA before signing anything. Go to fsrao.ca and use the public registry to confirm their licence number. FSRA imposed 80 sanctions in 2024-25, the majority in mortgage brokering, so unlicensed operators are an active risk in Ontario.
2. 2.Factor Ontario land transfer taxes into your cash planning before applying. If you are buying in Toronto, add both the Ontario LTT and the Toronto MLTT to your closing cost estimate. On a $1M purchase that is $32,950 coming out of your pocket at closing, separate from bridge loan costs.
3. 3.If you are a first-time buyer, stack every available program to reduce your bridge loan size. The Ontario LTT rebate (up to $4,000) plus the Toronto MLTT rebate (up to $4,475) plus the federal Home Buyers' Plan ($60,000 RRSP withdrawal per person) and the First Home Savings Account can meaningfully reduce the amount you need to bridge.
4. 4.If you are purchasing a new build closing between April 2026 and March 2027, the Ontario government has temporarily eliminated the 13% HST on eligible new homes under $1M. This can save up to $130,000 at closing, which directly reduces how much cash you need and how large a bridge loan you require.
5. 5.Price your existing Ontario home accurately from day one. The GTA market saw a 6.9% year-over-year price decline in early 2026, meaning an overpriced listing can sit unsold for months, extending your bridge period and driving up total interest costs.
6. 6.Compare the total cost of bridge financing against the cost of a temporary rental. In the GTA, a two-bedroom rental averages over $2,500 per month. If your bridge overlap is less than 3 months, bridge financing is almost always cheaper than moving twice and renting between transactions.
7. 7.Ask your bank about bridge financing before applying elsewhere. Most major Canadian banks offer bridge loans to existing mortgage clients at rates tied to your current mortgage, often the lowest available option if you have a firm sale in hand.
8. 8.Have your Ontario real estate lawyer review all bridge loan documents before signing. Pay close attention to extension terms, prepayment penalties, and any clauses that allow the lender to demand early repayment if market conditions change.

Ready to apply?

Apply online with Sphera Credit for Ontario bridge financing. Our AI-powered review evaluates your equity, your closing timeline, and your full financial profile so you can move forward with confidence.