A short-term loan that turns your client’s sale proceeds into cash before the sale actually closes.
Short answer
Bridge financing is a short-term loan, usually from the same bank holding or providing the new mortgage, that covers the gap between a purchase closing date and a sale closing date. It advances the buyer the net proceeds they expect from their sale so the purchase can close on time; once the sale closes and funds arrive, the bridge loan is repaid.
Most lenders require a firm, unconditional sale agreement on the current property, not just a listing and not a conditional deal, plus confirmed mortgage approval on the purchase — usually through the same lender for both. The loan is typically secured against the property being sold, and capped by most lenders at 90 to 120 days. Rates run “typically prime plus a premium”, but that changes with market conditions and should always be confirmed directly with the lender, never quoted to a client as a fixed number.
The buyer’s real estate lawyer receives the bridge funds in trust, applies them to the purchase closing, then on the sale closing receives the net proceeds, repays the bridge lender out of trust, and confirms the bridge security is discharged from the sold property. The biggest risk sits on one side only: “if your sale does not complete… you are stuck with the bridge loan outstanding but without the proceeds to repay it”. If your buyer will not qualify for a bank bridge at all — self-employed income, credit challenges, or no firm sale agreement yet — a private or vendor-financed bridge is a different animal, carrying higher upfront fees and higher rates than institutional financing and enforcement through power of sale on default rather than a straightforward bank repayment.
A bridge is not the only fix for a timing gap, and it is worth raising the alternatives before your buyer commits to one: negotiating matching closing dates if both deals are still in motion, so no bridge is needed at all; renting for a short period between a sale closing and a later purchase closing; or, for a smaller gap, an existing line of credit or a documented, properly papered loan from family, though rates and limits on either vary and should be checked directly.
See also: whether probate can delay an estate sale closing and whether the flipping rule can catch a fast resale.
A 30-minute call is enough to see where your own pricing and client-facing process would hold up under a closer look.
