Bridge Loan vs HELOC for Buying and Selling

When you're buying a new home before your current one closes, you may need short-term cash to cover the gap — most often for the down payment. Two tools can bridge that gap: a bridge loan and a HELOC (home equity line of credit). They solve the same problem in different ways, and the right choice depends on your timing, your equity, and how long you'll need the money.

Key takeaways

• A bridge loan is short-term financing tied to a firm sale, repaid when your old home closes.
• A HELOC is a revolving line of credit secured against your home equity that you can reuse over time.
• Bridge loans usually require a firm (unconditional) sale; HELOCs must be arranged before you sell.
• Both carry interest plus setup costs — compare the total cost, not just the rate.
• HOMEH gives eligible buyers the industry's highest Cashback Rebate, easing the cash crunch of a back-to-back move. Sellers list for 1%, or free when they also buy with HOMEH within 6 months, or $395 + HST with a Mere Posting.

Why you might need either one

When you buy and sell at the same time, your closing dates rarely line up perfectly. If your purchase closes before your sale, the equity locked in your current home isn't available yet — but you still need a down payment. Bridge financing and a HELOC both unlock that equity early so you can complete the purchase without scrambling.

The difference comes down to structure. A bridge loan is a one-time, short-term advance designed to disappear the moment your sale closes. A HELOC is a flexible credit line you set up against your home and can draw on as needed. Deciding between them starts with one question: do you already have a firm sale, or are you still listing?

How a bridge loan works

A bridge loan covers the period between buying your new home and closing the sale of your old one. Lenders typically advance funds based on your home's expected net sale proceeds, then take repayment automatically from the sale on closing day. Learn the full mechanics in our guide to bridge financing.

Most lenders require a firm, unconditional sale agreement before approving a bridge loan — they want certainty about when and how it gets repaid. Bridge loans are short (often a few weeks to a few months), and you pay interest only for the days you use the money, plus a modest setup or administration fee. Because terms are short and rates are quoted by each lender, treat the rate qualitatively and confirm the current figure with your lender.

How a HELOC works

A HELOC is a revolving line of credit secured against the equity in your home. You're approved for a limit, draw what you need, and pay interest only on the balance you use. Unlike a bridge loan, it isn't tied to a sale — it stays open and reusable. See our full explainer on what a HELOC is.

The catch for movers: you generally have to set up a HELOC before you sell, while you still own the home it's secured against. Once your home is sold, the equity (and the security for the line) is gone. HELOC rates are usually variable and quoted per lender, so confirm the current rate directly. If you're weighing tapping equity another way, compare with refinancing your mortgage.

Bridge loan vs HELOC: side by side

Here's how the two stack up on the factors that matter most when you're moving between homes.

Match the tool to your timing

If your sale is firm and the gap is short, a bridge loan is usually the cleaner fit. If you're not sold yet — or you want ongoing flexibility — a HELOC arranged in advance may serve you better. Map out the dates first using our guide to coordinating two closing dates.

Which should you choose?

Choose a bridge loan when you have a firm sale and simply need to cover a short overlap — it's purpose-built for exactly that and unwinds itself at closing. Choose a HELOC when you want flexibility, you haven't sold yet, or you expect to draw on your equity more than once. Many movers also lean on a HELOC when they aren't sure of their exact timeline. To decide whether to list or buy first, read should you buy or sell first.

Ease the cash crunch with HOMEH cashback

A back-to-back move is easier when you keep more of your own money. Eligible HOMEH buyers receive the industry's highest Cashback Rebate — cash that can offset bridge or HELOC interest and your moving costs. Sellers list for 1%, or free when they also buy with HOMEH within 6 months, or $395 + HST with a Mere Posting. Estimate yours with the cashback calculator or start your move at sell and buy with HOMEH.