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.
May 22, 2025
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
A rendering of the EverHome project. (The Sher Corporation)
September residential sales, not seasonally adjusted; the annual comparison uses CREA’s revised figures. Chart: 
Annual changes in the unadjusted national MLS® HPI and average sale price. The average is affected by the mix of transactions. Chart: 
Seasonally adjusted residential months of inventory by province. Local property types can differ substantially. Chart: 
Ontario and B.C. are the two provinces with forecast annual average-price declines in 2026. Chart: 
Annual average transaction prices in Canadian dollars. Forecast values are not December price targets. Chart: 
Five-year changes in seasonally adjusted composite MLS® HPI benchmarks, September 2021 to September 2026. Chart: 
The original proposal (left) and current proposal (right) for 7115 Yonge Street and 8-14 Grandview Avenue in Markam. (Arcadis)