Bridge Loans for Realtors: Help Clients Buy Before Selling — Even in a Slow Market
In this episode, Scott Dillingham reveals a powerful alternative bridge loan strategy using private and alternative lenders that lets clients buy their new home before selling — with no firm sale required. Most realtors…
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Show notes
Most realtors think bridge loans only work when your client has a firm sale date. They are wrong. In this episode, Scott Dillingham reveals a powerful alternative bridge loan strategy using private and alternative lenders that lets clients buy their new home before selling — with no firm sale required.
Most realtors know a bridge loan as a short-term financing solution that covers the gap when a client's new home closes before their existing home sells. That's the standard definition, and it works well when closing dates don't align. However, Scott introduces a lesser-known strategy using alternative lenders that completely changes the game for buyers who haven't sold their current property yet. In this approach, the buyer receives a single loan that covers both properties — the existing home and the new purchase — as long as the combined debt stays within the lender's total loan-to-value ratio. This means your client can move into their new home without waiting for the old one to sell, giving the listing more time on the market to attract the right buyer at the right price.
These alternative lender bridge loans offer significantly more flexibility than traditional bank bridge financing. Depending on the lender, terms can extend from one to two years, giving homeowners a substantial runway to sell their current property. The loans are structured as open mortgages, meaning they can be paid off at any time without penalty. Once the previous home sells, the proceeds are applied to pay down the debt, and the remaining balance is then converted into a traditional mortgage — ideally with a prime lender offering competitive rates and terms. While this product does come with higher interest rates and additional lender and broker fees, the ability to secure a new home without being stuck in a bidding war or losing out while waiting for a sale makes it a compelling option for motivated buyers. In a balanced or slower market where properties need a little extra time to sell, this bridge loan strategy can be a deal-saver for realtors struggling with stalled transactions.
Scott also explains how bridge loans work differently on the commercial side. For investors purchasing multi-family properties that may be vacant, under-renovated, or generating insufficient income, commercial bridge financing focuses on the exit strategy rather than the property's current cash flow. This allows investors to acquire properties that would otherwise be declined by traditional lenders, complete necessary renovations or lease-up strategies, and then transition into conventional or CMHC-insured financing once the property is stabilized. Whether residential or commercial, bridge loans provide the creative financing flexibility that helps realtors close more deals and deliver better outcomes for their clients.
Key Takeaways
- Bridge Loans Beyond the Basics: Most realtors only know bridge financing as covering the gap between closing dates, but alternative lenders offer a more flexible product that covers both properties in a single loan — even when the existing home hasn't sold yet.
- Buy Before You Sell Strategy: Clients can purchase their new home today and take their time selling the current property at the right price, rather than accepting a lowball offer out of desperation or losing their dream home while they wait.
- Flexible Terms Up to Two Years: Alternative lender bridge loans can extend from one to two years with open repayment terms, giving homeowners significant breathing room compared to the typical 90 to 120 day window offered by major banks.
- Seamless Conversion to Traditional Financing: Once the existing home sells and proceeds are applied, the remaining balance converts into a conventional mortgage with a prime lender, locking in the best available rates and terms.
- Commercial Bridge Loans for Investors: Multi-family and commercial property buyers can use bridge financing to acquire vacant or underperforming assets, complete renovations, and then refinance into long-term CMHC or conventional loans once the property is stabilized.
- A Tool to Close Deals in Slower Markets: When listings aren't moving quickly, bridge loans allow realtors to keep transactions alive by removing the requirement to sell before buying, opening the door for clients who would otherwise be stuck.
Links to Show References
- LendCity Mortgages (Book a Strategy Call): lendcity.ca
- Close More Deals Podcast: Subscribe on your favourite podcast platform
- (00:00) - – Introduction to Bridge Loans for Realtors
- (00:30) - – The Common Definition Most Realtors Already Know
- (00:54) - – The Bridge Loan Strategy Nobody Talks About
- (01:18) - – How Alternative Lender Bridge Loans Work for Residential Buyers
- (01:57) - – Flexible Terms: Open Loans Up to Two Years
- (02:30) - – Converting Bridge Financing to a Traditional Mortgage
- (03:09) - – How Commercial Bridge Loans Work for Multi-Family Investors
- (03:38) - – Exit Strategy Lending: Qualifying Without Cash Flow
- (04:15) - – Renovation and Lease-Up Strategies with Bridge Financing
- (04:39) - – Book a Call with LendCity to Strategize Your Next Deal
Realtor questions from this episode
How can a bridge loan help a buyer who has not sold their current home?
Scott explains that, through alternative lenders rather than major banks, the buyer can get one loan covering both properties as long as it stays under the lender's total loan-to-value. The buyer moves into the new home while the old one is still listed, which gives a slow listing more time to sell.
How long can a residential bridge loan last and how does it end?
Scott says that depending on the lender these loans can run one to two years. They are open, so when the home sells the proceeds pay down the debt, and any small remaining balance is converted into a traditional loan, preferably with an A lender if the borrower qualifies.
What does a commercial bridge loan do differently?
Scott says commercial bridge lenders look at the exit strategy rather than the property's income. For example, a vacant multifamily or a building being renovated can be financed even when a bank would decline it, and the loan is later swapped to conventional or CMHC financing once the property is rented or renovated.
Transcript
Transcript of the episode as recorded. Rates, fees and program details are as stated on the recording date and may have changed.
Welcome to the Close More Deals podcast.
Welcome to the Close More Deals podcast. I'm your host, Scott Dillingham. Today, I'm gonna be talking to you about an amazing tool that I personally use more on the residential, but commercial has a great, use case for it as well. But the product operates slightly different. So I'm gonna talk to you about bridge loans. Now before you skip thinking, oh, I know a bridge loan, the way that I'm going over it today is completely unknown to most REALTORS®, and they don't even know this is a thing.
So I just wanna outline it to you. So most people think a bridge loan is when you sell your home and it's closing after you move into the new home, then the lender gives you a bridge loan for your down payment. So that is one definition. That's the common one. That's what everyone knows. And now I'm gonna share with you how to use bridge loans in a way that nobody does that will help you to close more deals. So let's say you have a listing and it's not it's not moving.
Right? Our our market is is a little bit slower. It's not moving. And so this is more towards the residential side. So what you can do is your your buyer, right, they wanna buy this new home, but they haven't sold the other home yet. Their income doesn't support them qualifying for both loans. Right? One on their existing and one on the new. So we've got to get them a product to move forward. So that is a bridge loan. So how it works on the residential platform is when the buyer so what they'll do is they'll end up getting it's through alternative lenders, so it's not through major banks or anything, but what they'll do is they'll give your buyer one loan that covers both properties.
Right? As long as you're under the lender's total loan to value. So then what happens is your buyer can obviously move in to the new home, and it doesn't matter that their old one has not sold. Depending on the lender, these bridge loans can go for one to two years. Now, obviously, who wants to pay higher interest for that long, but, like, it does have that flexibility. Ideally, we want the home sold right away. So when the home does sell, these loans are set up so they're open, so you can pay them off right away.
So we take all the sale proceeds, and we pay down the debt as much as…
So we take all the sale proceeds, and we pay down the debt as much as possible until there's a small balance left. And then once we know that small balance, we then work with the borrower to convert that into a traditional loan, preferably with an A lender, you know, if they have the good credit and all that stuff and they qualify for it. But by doing this, obviously, there's costs, you know, a little bit higher rates. There's there's lender fees, broker fees on this program.
It ranges by client, by location, risk of the deal. Right? So let's talk, and we can, like, come up with a strategy for your borrower. But, ultimately, it's a fantastic tool because it lets them buy the home that they want today even though their home hasn't sold to give it more time on the market so it can sell. Because properties are moving if they're priced right, but sometimes they just need a little more time depending on the market. So that's how bridge loans are generally used on residential.
Now commercial bridge loans are used differently. So say you're buying a multifamily property and it's vacant. Right? A bridge loan will come into play, and they're not really looking at the income of the property because with the bridge loan, again, it's more creative. They look at the exit strategy. So they'll lend the loan to value again and all this stuff. It all depends, and it's all different based on the client. But they'll give the client this bridge loan where they would normally get declined from a bank because the cash flow doesn't support the debts.
And then we move forward. The client will rent out the properties, or if it needs renovations, we have a lot of those too where they're adding units or renovating, you know, all the units, and so, they don't have that income to qualify. So the bridge loan comes in, and then we swap it to traditional financing, whether that's a conventional loan or if we're going with CMHC, like we kinda work with the the borrower on that plan, and we take action there.
So bridge loans on commercial are fantastic for properties that don't…
So bridge loans on commercial are fantastic for properties that don't show well or that don't have the traditional income that you need to qualify, but the new investor or the new buyer who's taking it over is gonna turn over the property. So two different style of bridge loans here that most people are not even aware of, but we do these things all the time. So if this was useful, please like, please follow, share with a friend, you know, all that good stuff.
But more importantly, book a call with somebody on our team. The the link is in the in the show notes down below, and we'll help you strategize your file or your client's file, to make it a success. Looking forward to seeing you next week.