If you are a homeowner in British Columbia, you know that our real estate market moves incredibly fast. Whether you are looking at a condo in Vancouver or a family home in Surrey, timing is everything.
One of the most common questions we hear at Seven Lending is: “I need money for my next move, should I get a bridge loan or a HELOC?”
Both of these tools allow you to use the value of your current home to reach your next goal. However, they work in very different ways. Choosing the wrong one could cost you thousands in interest or fees. This guide will help you decide which is best for your specific situation in BC.
Bridge Loan vs. HELOC: What is the difference?
The main difference is time and purpose. A bridge loan is a short-term loan (usually 1 to 90 days) used specifically to cover the down payment on a new home before your current home sells. A HELOC (Home Equity Line of Credit) is a long-term, revolving credit line that you can use, pay back, and use again for renovations, debt, or a down payment.
Understanding the Bridge Loan
A bridge loan is a specialized tool. It is designed for one specific scenario: you have bought a new house, but your old house hasn’t closed yet.
- How it works: We lend you the equity from your current home so you can close on the new one. When your old house finally sells, the lawyer uses the sale money to pay us back immediately.
- Best for: People who have a firm sale agreement on their current house but have a “gap” in dates.
- Speed: These are very fast. If you need a private money lender to move quickly to save a deal, a bridge loan is the way to go.
Understanding the HELOC
A HELOC is much more flexible. Think of it like a giant credit card that is attached to your house.
- How it works: You are approved for a maximum amount based on your home’s value. You only pay interest on the money you actually spend. You can keep a HELOC open for years.
- Best for: People who want to do home renovations, consolidate debt, or those who haven’t found their new home yet but want to be ready to make an offer.
- Qualification: Banks are often very strict about HELOCs. If you are self-employed or have a lower credit score, you might find it easier to get a HELOC through private lenders in BC.
Key Differences in Costs
When deciding between the two, you have to look at the math.
- Interest Rates: HELOC rates are usually lower than bridge loan rates. However, bridge loans are only held for a few weeks, so the total interest paid is often very small. You can compare current options on our private mortgage rates page.
- Setup Fees: Bridge loans usually have a flat administration fee (often around 200–200–500). HELOCs may require an appraisal and legal work to set up, which can cost more upfront ($1,000+).
- Monthly Payments: A HELOC requires monthly interest payments. A bridge loan is usually paid back in one lump sum when your house sells.
When to Choose a Bridge Loan
You should use a bridge loan if:
- You have a firm date for when your current house will sell.
- You only need the money for a very short window (less than 3 months).
- You don’t want a long-term debt tied to your property.
If you are worried that your house might take longer to sell, or if you don’t have a buyer yet, a bridge loan from a traditional bank might be hard to get. In that case, we often suggest looking into alternative financing options.
When to Choose a HELOC
You should use a HELOC if:
- You are “house hunting” and want to have the deposit money ready the moment you see a deal.
- You plan on keeping your current home as a rental property and need a down payment for a second home.
- You need money for other things, like fixing up your new place before you move in.
If the big banks have denied your HELOC because of your income, don’t give up. Many of our clients use home equity loans from private sources to get the same result with less paperwork.
Qualification: Credit and Income
BC banks have become very tough with their “stress tests.” This makes it hard for many people to get a HELOC.
- Traditional Banks: They will look at your income, debt, and credit score very closely.
- B-Lenders: If you are a consultant or freelancer, you might want to learn what is a B-Lender to see if they offer a better middle ground.
- Private Lenders: If you have bad credit, we focus more on the equity in your home than your score. This is often the fastest way to get a bridge loan or equity line when time is running out.
BC Market Specifics
In high-priced areas like the Lower Mainland or the Okanagan, the “equity” in your home is your greatest tool.
- If you live in Kelowna or Victoria, your home has likely gained significant value.
- You can use our home purchase calculator to see how much of that equity you can “bridge” over to your next property.
Which Is Right For You?
If your move is simple and your current home is already sold, a bridge loan is usually the easiest and fastest choice. It gets the job done and disappears the day you move.
If you want more flexibility, or if you are buying your next home before you have even listed your current one, a HELOC or a short-term second mortgage is likely the better path.
At Seven Lending, we don’t believe in “one size fits all.” We look at your moving dates, your income, and your goals to find the right fit.
Are You Ready To Make Your Next Move?
- Apply Now to see which option fits your budget.
- Not sure how much you can get? Use our tool to see how much you can borrow against your house.
Moving should be an exciting new chapter, not a financial nightmare. Let us help you build the right bridge to your new front door.