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Short-Term Financing

Explore short-term financing in Canadian real estate, how it works, who uses it, and why it's critical for bridging timing or funding gaps.

Short-Term Financing

May 22, 2025


What is Short-Term Financing?

Short-term financing refers to temporary loans or credit with repayment periods under 12 months, used to address immediate real estate funding needs.

Why does Short-Term Financing Matter in Real Estate?

In Canadian real estate, short-term financing is used when buyers face timing gaps — such as needing a down payment before selling a current home, or funding renovations prior to refinancing.

Common types include:
These loans typically carry higher interest rates but offer rapid approval. They’re often structured as interest-only and repaid in full once long-term financing or a sale is completed.

Short-term financing is useful in competitive markets and for investors or developers who need flexibility and speed to close deals.
Understanding this tool helps buyers take advantage of time-sensitive opportunities without long-term financial commitment.

Example of Short-Term Financing in Action

A developer uses a six-month private loan to fund renovations before applying for a mortgage refinance.

Key Takeaways

  • Loans repaid in less than 12 months.
  • Used for bridging, renovations, or fast closes.
  • Higher cost, faster access.
  • Often repaid after sale or refinance.
  • Valuable in competitive or time-sensitive situations.

Related Terms

Additional Terms

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Public realm improvements are enhancements to public spaces such as sidewalks, parks, plazas, and streetscapes, often funded or contributed by. more

Mortgagee in Possession

A mortgagee in possession is a lender who takes control of a property after borrower default, but before foreclosure or power of sale. The lender. more

Lease Surrender Agreement

A lease surrender agreement is a negotiated contract between a landlord and tenant that ends a lease before its scheduled expiration. Terms may. more

Green Infrastructure

Green infrastructure refers to natural or engineered systems that manage stormwater, reduce heat, and improve sustainability in developments.. more

Escrow Holdback

An escrow holdback is a portion of funds withheld at closing and held in escrow until specific conditions are met, such as completion of repairs,. more

Underused Housing Tax

The Underused Housing Tax (UHT) is a federal annual 1% tax on the value of vacant or underused residential property owned by non-resident,. more

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