What does it cost to carry two homes while I wait for my sale to close? (Ontario)

In Ontario, carrying two homes while you wait for your sale to close means paying the running costs of both for every day they overlap. The running costs are two mortgage payments, two property tax bills, two insurance policies and two sets of utilities, plus bridge interest and any fee if a bridge loan covers your down payment. The real extra cost of the move is the old home's costs for those days plus the bridge charges, so the number of overlap days matters most.

What you pay while you own both homes

• Two mortgages. Your current mortgage keeps running until the sale closes and your lawyer pays it out from the proceeds. The new mortgage starts on the purchase closing, and each lender charges interest for every day its loan is outstanding.
• Property tax on both. You owe tax on each home for the days you own it. On closing, the lawyers generally adjust the tax between buyer and seller.
• Insurance on both. Many insurers set conditions for a home that sits empty, so tell your insurer if the old home will be vacant.
• Utilities, and condo fees if either home is a condo.
• Bridge interest and fees. A bridge loan lends you the equity in the home you are selling until its sale closes. Bridge financing is commonly short, often a few months, and generally needs a firm sale; the cost and the limits vary by lender, and a bridge loan is subject to lender approval.

Can I buy a new home before I sell my current one? explains how bridge financing works. One-time costs such as legal fees, land transfer tax and moving are separate. One-time costs do not change with the number of overlap days.

A worked example of the overlap cost

These figures are illustrative, not a quote. The figures use monthly dollar amounts, not rates.

The home you are selling: mortgage payment $2,200 a month, property tax $450, insurance $120, utilities $280. Total: $3,050 a month.

The home you are buying: mortgage payment $3,400 a month, property tax $600, insurance $150, utilities $320. Total: $4,470 a month.

The purchase closes 45 days before the sale. The lender's written bridge terms come to an illustrative $1,800 in interest and fees for those 45 days.

1. Old home per day: $3,050 × 12 ÷ 365 = about $100. Over 45 days: about $4,500.
2. New home per day: $4,470 × 12 ÷ 365 = about $147. Over 45 days: about $6,600.
3. Bridge: $1,800.

Out of pocket during the overlap: about $12,900. But you would pay the new home's $6,600 anyway once you live there. The cost of the overlap itself is the old home's $4,500 plus the $1,800 bridge, or about $6,300.

Cut the overlap to 15 days and the old home costs about $1,500 ($100 × 15), plus a smaller bridge charge. Spreading monthly costs over days is a simplification, since payments fall on their own dates. The total over the overlap still comes out close.

How to make the overlap shorter or smaller

• Set the dates together. A sale that closes first, or on the same day as the purchase, removes most of the overlap. Your lawyer can apply same-day sale proceeds to the purchase.
• Get the bridge terms in writing before you firm up your purchase date, so the dollar cost is known.
• Check what happens to your current mortgage. If your lender lets you port the mortgage, the balance may move to the new home instead of being paid out with a penalty. See whether you can take your mortgage with you when you move.
• If your sale is not firm, a bridge loan is generally not available. Carrying both mortgages then means qualifying for both payments under the lender's rules and the stress test, subject to lender approval.

What to do next

Put your own monthly costs and number of days into the bridge-gap calculator. If your dates are tight, use our call-me-back form before you sign, and we will go through the mortgage side with you.