Bridge financing is temporary borrowing of additional funds to cover the cost of your new home if the sale of your current home is not complete by the time your new home's purchase is complete. Bridging can also be used to provide additional time to move or do renovations in your new home before you move in - like painting, flooring, changes in kitchen, etc.
If you are selling and purchasing, always discuss bridge financing or overlapping with your mortgage broker or financial institution.
Bridge financing or overlapping rates vary and could be 2% or more above prime. Additionally, there may be administrative costs for processing the loan.
Some financial institutions provide free bridge financing services. You pay only the interest on the loan for the number of days you are carrying the loan and usually there are no processing fees. This sometimes can work out to be as little as $14-$30 a day.
Check with your financial institution for specific details and costs of borrowing using bridge financing.