A bridge loan is short-term financing for a property that cannot yet qualify for permanent debt: mid-renovation, mid-lease-up, or bought faster than a bank could move. It is priced higher, sized on where the property is going rather than where it is, and it is written to be replaced.
- Its exit is its whole premise. A bridge with no credible permanent loan waiting for it is not a bridge, it is a countdown.
- It is expensive on purpose, and the cost is bearable only because it is short. A delayed business plan is what makes it painful.
- Draws are conditional. The money for the work arrives as the work is verified, not when the owner needs it.
- Extension options exist and they are priced. Read what they require before assuming the term can stretch.
Related terms
All termsInterest-Only
An interest-only period is a stretch at the start of a loan when payments cover interest and nothing else.
FinanceLoan Maturity
Maturity is the date the loan must be repaid in full, regardless of how the property is performing.
FinanceCapital Stack
The capital stack is the ordered list of everyone whose money is in a deal and who gets paid back first: senior debt at the bottom, then any secondary debt, then preferred equity, then common equity on top.
Terms arrive with the writing.
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