Here are its main characteristics and uses:

• Short Term: Generally, bridge loans have a duration ranging from a few days to 90 days in Canada, enough to complete the transition between two properties.
• High Interest Rates: These loans typically have higher interest rates due to their short-term nature and the additional risk involved.
• Collateral: The loan is generally secured by the borrower’s current property, the new property, or both.
• Flexibility: They allow homeowners to buy a new house without waiting to sell their current one. This is especially useful in competitive real estate markets where it may be necessary to act quickly to secure a new home.
• Repayment: The funds from the bridge loan are repaid when the borrower’s current property is sold. The borrower can use the proceeds from the sale to pay off the bridge loan.