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

Budgeting

Budgeting in real estate refers to the process of forecasting and managing income and expenses associated with owning, operating, or developing a property.. more

Tenant Improvements

Tenant improvements refer to custom modifications or build-outs made to a leased space to suit the tenant’s operational needs, often negotiated as. more

Highest and Best Use

Highest and best use refers to the reasonably probable use of a property that results in the highest value, provided it is legally permissible,. more

Gross Lease

A gross lease is a commercial lease where the tenant pays a fixed rent, and the landlord covers most or all operating expenses such as property. more

Brownfield

A brownfield is a property that was previously used for industrial or commercial purposes and is now vacant or underused, often requiring. more

Record of Site Condition (RSC)

A Record of Site Condition (RSC) is a formal document filed with a provincial environmental authority certifying that a property meets required. more

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