Bridge and land financing when timing decides the deal.
Some deals are won on certainty of close, not on rate. A seller taking a lower offer because it funds within weeks is a normal outcome in commercial real estate.
Bridge and land lending exists for those situations. It costs more than term debt. It is supposed to. What you are buying is speed and flexibility, and the right question is whether the opportunity is worth the carry. And when bank criteria are the obstacle rather than the timeline, private and second mortgage structures can carry the deal.
The short answer
Bridge and land financing costs more than term debt on purpose. What you are buying is speed and flexibility, and the lender's first question is how the loan gets repaid.
| Tool | What it is for | Priced off | Typical leverage | What the lender underwrites |
|---|---|---|---|---|
| Bridge | Short term capital secured against commercial property, used when certainty of close matters more than rate | Prime or flat rate, plus 3.0 to 6.0 percent | 65 to 75 percent | The exit |
| Land | Buying and holding a site that produces no income while approvals move forward | Prime or flat rate, lender specific | Lower than income property, set by approval stage | Approval stage and holding cost |
| Private or second mortgage | Carrying a deal when bank criteria, not the timeline, are the obstacle | Flat rate, commonly 8 to 12 percent | 65 to 75 percent | Equity and the exit |
When bridge is the right tool
- Close an acquisition before term financing is arranged
- Fund a property through repositioning or lease up
- Take out a maturing loan while a longer term solution comes together
- Free equity quickly for a time sensitive opportunity
Bridge is the wrong tool when there is no believable exit. If nobody can say how the loan gets repaid and when, a bridge only delays the problem at a higher cost.
What drives the cost
A bridge loan has more moving parts than a rate. Expect these on every file:
- The rate, either a margin over prime or a flat rate.
- A lender fee, typically 1 to 2 percent of the loan, charged up front or deducted from the advance.
- A broker fee, disclosed in writing before you commit.
- Legal costs on both sides, since you usually pay the lender's lawyer as well as your own.
- An appraisal.
- Any interest reserve the lender holds back from the advance to cover payments during the term.
On a short loan, the fee and the length of the term often matter more than the rate. A fee is paid once however long the loan runs, so a short term carries it over fewer months. Our guide on what a bridge loan really costs works through a full example.
Loans secured against raw or serviced land, typically for:
- Acquisition of development sites
- Holding land through rezoning or approvals
- Servicing and site preparation ahead of construction
Land is the hardest asset to finance conventionally. It produces no income, values move with entitlement status, and lenders are cautious. Terms reflect that reality.
How land is valued at each approval stage
In British Columbia land moves through stages. Each one removes risk, so lender appetite and leverage rise as approvals land, and holding costs become easier to finance.
Stage 1. Official Community Plan designation
What it settles: What the municipality intends the land to become.
How a lender reads it: Direction only. The lender still values the land close to its current use.
Stage 2. Rezoning
What it settles: The use and density the site is allowed.
How a lender reads it: A real step up in value and appetite, because the plan now has legal footing.
Stage 3. Development permit
What it settles: The form and character of the specific project.
How a lender reads it: The project is defined, so the value rests on something a lender can underwrite.
Stage 4. Building permit
What it settles: The right to start construction.
How a lender reads it: The site is ready for a construction lender, and the land loan has a clear takeout.
Stage 5. Subdivision approval
What it settles: For subdivided land, the legal creation of the new lots.
How a lender reads it: Lots can be sold or financed individually, which gives the exit a firm shape.
Reserve land follows its own rules, covered in our page on financing land inside the Agricultural Land Reserve. When the building permit lands, the file moves to construction financing.
The exit is the whole conversation
Lenders want to know precisely how the loan gets repaid and when. There are three exits, and each needs its own evidence.
- Sale. A listing strategy and comparable sales that support the price you need.
- Refinance into term debt. Stabilised income and a realistic read on what a term lender will do with it. You can test that with our commercial mortgage calculator.
- Construction takeout. A construction lender's term sheet, or at least a budget a construction lender can work from.
Extensions are usually available only at a cost. Negotiate the extension terms up front, when you have leverage, rather than at maturity, when you do not.
Speed comes from preparation, not pressure.
Files that close quickly have the appraisal ordered early, clean title, and a documented exit. Files that drag are usually waiting on something that could have been started weeks earlier. Our deal submission checklist shows what to have ready.
Bridge and land questions we hear most.
Where we finance this in British Columbia
Let's look at your timeline.
Tell us the property, the timeline and how you plan to exit. We will tell you what is realistic.