Bridge financing and exit planning

A bridge loan is temporary by design. It exists to solve a timing problem, usually buying a new property before an existing one sells or refinances. The loan itself is rarely the hard part. The exit is.

Start with the exit, not the rate

Before comparing bridge options, write down the answer to this: what specific event retires this debt, and on what date? "The house should sell" is not an exit. "Listed in March, closing by June based on comparable sales" is.

If the exit depends on a sale, check what is actually selling nearby at your price point. If it depends on a refinance, confirm that the property will qualify once the work is complete.

Understand the two interest structures

Bridge programs treat interest in one of two ways:

• Paid monthly out of pocket, which increases your carrying cost but keeps the loan balance flat
• Financed or reserved, which increases the balance and therefore the payoff

These are not the same thing, and a loan that finances interest can look cheaper monthly while costing more overall. Know which structure you are comparing.

Count all the debt, once

When two properties secure the debt, the combined picture is what matters. Add the new loan, the bridge, and any liens that remain. Exclude liens that are paid off at closing — they are gone. Do not count a cross-collateralized loan twice just because it touches two properties.

Combined loan-to-value is total debt secured by the collateral divided by the combined eligible value of that collateral. Keep equity separate from available cash; a property with substantial equity does not automatically produce cash at closing.

Build in a margin for delay

Model the exit three months later than you expect. If the project still works, the structure is sound. If it only works on the best-case timeline, the risk is yours, not the lender's.

Our Bridge Purchase Analyzer shows sources and uses, combined LTV, and the net proceeds released when the current property sells, so the exit is visible rather than assumed.