How do I sell one home and buy another without being caught between them?

Same-day closings

On a same-day closing the money moves in sequence. The buyer's lawyer sends the price for your sale; we pay out your mortgage and commission; the balance, plus your new mortgage advance, goes to the seller of your new home. Your purchase cannot register until your sale funds are in, so keys to the new home come later in the day, and a delay on your buyer's side becomes a delay on yours.

Both agreements should carry the same closing date, and your purchase agreement should give a realistic time for keys. Movers who understand a two-closing day are worth finding.

Staggered closings and bridge financing

If your purchase closes before your sale, you need the down payment before the sale money exists. Bridge financing is a short-term loan from your lender for that gap, repaid from the sale proceeds when they arrive. Lenders generally require a firm sale agreement, charge interest for the days the bridge runs and add a fee; the lender's own disclosure sets those terms and the Financial Consumer Agency of Canada explains what it must tell you.

The lender usually secures the bridge with a promissory note and a direction that we repay it from the sale, and sometimes with a charge on the home being sold. We sign that direction and discharge the bridge on the day your sale closes.

Buying conditional on selling

A purchase conditional on the sale of your current home protects you completely: if your home does not sell by the deadline, the purchase ends and your deposit comes back. Sellers dislike it, and where they accept it they usually add an escape clause that lets them keep marketing and, if another offer arrives, require you to firm up within a short period or step aside.

The condition needs a realistic deadline for your sale to become firm, not merely listed, and it should say what counts as sold.

What can go wrong, and who carries it

If your sale collapses after your purchase is firm, you still have to close the purchase. A bridge lender that relied on a firm sale will want to be repaid or to convert the loan; a purchase you cannot fund is a breach that puts your deposit and more at risk. If your purchase collapses after your sale is firm, you close the sale and become a tenant, or a buyer in a hurry.

Insurance must cover both homes across the gap, and two mortgages may be outstanding for a few days. None of this is unusual; it is why the order of the two deals should be decided before either offer is made.

What the lawyer does on a two-closing day

One lawyer usually handles both files, which lets the money move without waiting for a second office. We confirm your buyer's funds, pay out your mortgage, apply the balance to your purchase alongside your new mortgage advance, register the transfer to you, then release keys. If you are buying first, we advance the bridge, close the purchase and later repay the bridge from your sale.

The Interest Act and your mortgage contract govern any prepayment charge on the mortgage being paid out; the payout statement should reflect the actual closing date.