Bridge Loan Calculator Canada

What the bridge loan calculator does

A bridge loan covers the days when you own two homes at once. If the house you are buying closes before the house you are selling, you need cash you do not yet have, and a bridge supplies it against the equity in the property still on the market.

The tool takes the four numbers a lender quotes (amount, rate, number of days and fees) and turns them into figures you can act on: interest per day, total cost, the cash that reaches your closing after fees, and the annualized all-in rate for comparing the bridge with other borrowing.

With the default inputs, a $200,000 bridge at 9.45% for 60 days on a 365-day basis costs about $51.78 a day, or $3,106.85 in interest. Adding a $500 lender fee and $750 in legal fees brings the total to $4,356.85, and the annualized all-in rate is about 13.25%.

Why Canadians end up needing a bridge

Closing dates rarely line up. A seller in the chain wants two more weeks, a buyer’s financing takes longer than expected, or you found the right house before yours sold. The down payment on a purchase is due on the purchase closing date, and the equity from your sale arrives on the sale closing date. If those are different days, there is a gap.

The bridge fills it. It is advanced on the purchase closing, secured against the property you are selling or sometimes both properties, and repaid in full from the sale proceeds. Once the sale closes, the facility is gone. That short, self-repaying shape is what distinguishes a bridge from ordinary borrowing.

How the interest is charged

Bridge interest is simple interest charged per day, not compounded like a mortgage. The lender divides the annual rate by the number of days in the year and applies the result to the balance for each day the money is out.

Some lenders divide by 365, others by 360. On a 360-day basis the same quoted rate gives a slightly higher daily charge. The difference is small on a two-week bridge but real money on a four-month private facility. The basis is set out in the commitment letter, and the calculator lets you switch between the two so your figure matches the paperwork.

The rate is usually quoted as prime plus a spread. Bank bridges commonly sit a few points over prime; private bridges are much higher. Because this varies by lender and by the strength of the deal, enter the rate you were quoted.

Reading the results

The headline figure is the total cost: interest for the term plus the lender fee plus the legal fee. That is the money that leaves your pocket.

The interest per day is the most useful figure for planning. Closing dates move, and knowing what each extra day costs turns a vague worry into a priced risk.

The annualized all-in cost looks alarming on purpose. A fixed fee spread over a few weeks can annualize into double digits even when the underlying rate is reasonable, because the fee is the same whether the bridge runs five days or fifty. Use that figure to compare a bridge with a HELOC or a personal loan, not to decide whether the bridge is affordable; for that, look at the total dollars.

The net advance line shows the cash that reaches your lawyer once the fees are deducted. If you need a specific amount at the purchase closing, you may need to bridge slightly more than the shortfall.

Ways to reduce the cost

The cheapest bridge is a short one. If you can move closing dates closer together, that usually saves more than negotiating the rate. On the default $200,000 bridge, one week less saves about $362, slightly more than taking a full percentage point off the rate for two months (about $329).

Bridge only what you need. Interest is charged on the full amount advanced, and money sitting in a lawyer’s trust account costs you every day.

Ask whether the lender will waive or reduce the administration fee if you also place the new mortgage with them. Many will, because the bridge is a small accommodation attached to a much larger piece of business.

Arrange the bridge with the new mortgage rather than at the last minute. A bridge requested a week before closing is priced as an emergency; one requested with the mortgage application is priced as part of the deal.

Before you commit

Read the commitment letter for the day-count basis, the fee, whether interest is paid on repayment or monthly, and what happens if the sale closing is delayed. Ask your lawyer what registration and discharge will cost, since on a short bridge that is often the second-largest cost after interest.

The figures here are estimates based on the amount, rate, term and fees you enter. Your lender’s commitment letter and your lawyer’s statement of adjustments are the authoritative numbers, and this is general information rather than financial advice.

About This Bridge Loan Calculator

Use this bridge loan calculator to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.