A bridge loan is short-term financing designed to cover the gap between where you are now and where you need to be — closing on a new property before your current one sells, covering a cash flow gap during a renovation, or moving quickly on an opportunity while permanent financing is still being arranged. Unlike a conventional commercial mortgage, a bridge loan is built around speed and flexibility, not the lowest possible rate.
That flexibility comes at a cost. Bridge loans typically carry higher interest rates and shorter terms, usually six months to three years, and lenders expect a clear plan for how the loan gets paid off. That plan is called an exit strategy, and it's the single most important part of any bridge loan conversation.
Common exit strategies include:
- Selling the property once renovations or repositioning are complete
- Refinancing into a conventional long-term mortgage once the property stabilizes
- Paying off the bridge loan with proceeds from the sale of another asset
The mistake many borrowers make is treating the bridge loan as the solution rather than the transition. Before signing anything, you should already know, with real numbers, how and when you'll pay it off. A bridge loan without a clear exit isn't a strategy — it's a bet.
If you're evaluating whether a bridge loan fits your situation, the conversation should start with the exit, not the rate.