Not every commercial deal fits a conventional mortgage. Bridge loans solve timing problems that traditional financing cannot. Here is how the two compare and when to use each.
What a conventional commercial mortgage is
A conventional commercial mortgage is longer-term, lower-rate financing for stabilized properties with predictable income. It is the right tool when the asset and borrower clearly fit a bank or institutional lender’s criteria and you are not in a hurry.
What a bridge loan is
A bridge loan is short-term financing used to bridge a gap — closing quickly, buying time to reposition or stabilize a property, or covering a purchase before a refinance or sale. It is faster and more flexible, at a higher rate.
When bridge financing makes sense
Bridge loans suit value-add projects, time-sensitive acquisitions, properties not yet stabilized enough for a bank, or situations like stopping a power of sale. The plan is always to exit into conventional financing or a sale.
Matching the tool to the deal
The key is using bridge financing deliberately, with a clear exit, rather than as a permanent solution. A broker can structure the bridge and line up the take-out financing at the same time.
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