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
Canadian respondents were more likely to expect an undersupply of development/redevelopment equity capital (63%) than debt capital (46%) in 2027. These are survey expectations, not measured financing volumes. Source: PwC and ULI, Emerging Trends in Real Estate 2027, pp. 136–137. Original chart.
Toronto census metropolitan area housing starts fell from 37,718 units in 2024 to 26,087 in 2025, a 30.8% decline (rounded to 31%). Starts measure construction begun, not completed homes. Source: CMHC, as cited in PwC and ULI, Emerging Trends in Real Estate 2027, p. 145. Original chart.
Illustrative calculation: a $4.5-million value ceiling versus income-based capacity of about $4.25 million at 4%, $3.62 million at 5% and $3.13 million at 6%. Assumes 50-year amortization and 1.15 debt coverage.
Source: Department of Finance missing-middle backgrounder and Budget 2026 Chapter 3, November 5, 2026. Fiscal-year funding starts are not home-completion dates.
