Short-Term Loan

Explore how short-term loans work in Canadian real estate and how they help bridge financial gaps during fast-moving transactions or transitions.

Short-Term Loan



What is a Short-Term Loan?

A short-term loan is a temporary loan with a repayment period of less than one year, typically used to cover immediate or transitional real estate expenses.

Why do Short-Term Loans Matter in Real Estate?

In Canadian real estate, short-term loans provide fast access to funds when timing is critical. They are commonly used to bridge the gap between buying and selling properties, fund renovations, or meet closing requirements while waiting for long-term financing.

Key characteristics include:
  • High interest rates due to shorter repayment windows
  • Often interest-only, repaid in a lump sum
  • Can be secured by home equity or collateral

Short-term loans can come from traditional lenders or private sources and are particularly useful for real estate investors, house flippers, or buyers in competitive markets.
Understanding short-term loans helps buyers and sellers navigate cash flow gaps and prevent missed opportunities due to timing constraints.

Example of a Short-Term Loan in Action

A buyer takes a 90-day short-term loan to cover a $40,000 deposit while awaiting the closing of their existing home sale.

Key Takeaways

  • Temporary loan repaid within a year.
  • Used to bridge timing or funding gaps.
  • Higher interest, faster approval.
  • Useful for fast closings or renovations.
  • Often repaid after a property sells or is refinanced.

Related Terms

  • Bridge Loan
  • Private Lending
  • Short-Term Financing
  • Down Payment
  • HELOC

Additional Terms

Rent Control

Rent control refers to government regulations that limit how much landlords can increase rent for residential tenants each year.. more

Receivership

Receivership is a legal process where a court or secured creditor appoints a receiver to take control of a borrower’s assets, such as property or. more

REALTOR

A REALTOR is a licensed real estate professional who is a member of the Canadian Real Estate Association (CREA) and adheres to its Code of Ethics and. more

Property Use History

Property use history refers to the documented past uses, functions, and occupancy of a property, which may affect environmental risk, zoning, or. more

Property Management

Property management is the oversight and administration of real estate assets on behalf of the owner, covering leasing, maintenance, financial. more

Property Maintenance

Property maintenance refers to the ongoing upkeep, repair, and management of a building or land to preserve its safety, functionality, and appearance.. more

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