When a commercial balloon payment is coming due, you have four main options: refinance into permanent financing, refinance with a bridge loan if the property or timing does not fit a bank yet, sell the property, or negotiate an extension with your current lender. The key is starting early. Twelve months out you have every option; ninety days out, some doors have closed.
Check whether your property is refinance-ready with the DSCR calculator, and our DSCR explainer covers what the ratio means and the loan your income supports.
Most commercial mortgages are not fully amortized. They are structured with a balloon: five, seven, or ten years of manageable payments, then the entire remaining balance due at once. That structure works fine, right up until the maturity date is on the calendar and the refinance is not lined up. If that is where you are, here is a clear map of your options.
A balloon maturity is not a sign anything went wrong. It is how commercial lending is built. The assumption baked into every balloon loan is that you will refinance before maturity. The problem is that the refinance depends on conditions at that future date: the property's income, market rates, and your bank's appetite, none of which you control from years away. Plenty of solid properties hit their maturity date at an awkward moment.
Refinance into permanent financing. The default path. If the property is stabilized and the numbers support it, a conventional or SBA refinance pays off the balloon and resets you on long-term footing. The catch is timing: a bank refinance takes 60 to 90 days when everything goes well, so this path requires starting early.
Refinance with a bridge loan. When the property or the timing does not fit a bank, income is thin, a big tenant just left, rates moved against you, or the maturity date is simply too close for a bank process, a bridge loan pays off the balloon on time and buys you 6 to 36 months to stabilize and refinance properly. This is one of the most common bridge scenarios there is.
Sell the property. If the property no longer fits your plans, a sale before maturity pays off the loan cleanly. The risk is being forced to sell on the market's schedule instead of yours, which is what happens when this becomes the only remaining option.
Negotiate with your lender. Lenders sometimes extend maturities, especially for borrowers who raise the issue early with a credible plan. It costs nothing to ask. But an extension is a favor, not a right, so treat it as a bonus path rather than the plan.
Twelve months before maturity, all four options are open and you are negotiating from strength. Six months out, you can still execute a bank refinance if you start immediately. Ninety days out, the bank path is usually gone and you are choosing between a bridge, a sale, or your lender's goodwill. The single most expensive decision borrowers make with a balloon is waiting.
There is one more wrinkle worth knowing: many balloon loans carry prepayment penalties that fade or disappear in the final stretch before maturity, often the last 90 days. That window is designed for exactly this refinance, so knowing your loan's penalty schedule helps you time the move.
If your maturity is inside six months and the refinance is not locked, the priority is certainty of execution, a financing path that will actually close before the date, even if it costs more than the bank loan you would prefer. A bridge that closes on time beats a cheaper refinance that closes late, because late is default.
Send us the property, the balance, and the maturity date, and we will tell you which paths are realistically open on your timeline, usually within one business day.
Alan is Managing Partner at BluRidge Funding and has worked in mortgage and real estate finance since 1996, with commercial lending as a principal focus since 2003. He holds an economics degree from BYU and a law degree from the University of Utah, and is a founding board member and former President of the Utah Association of Mortgage Brokers. More about the team.
Send the property, the loan amount, and your timeline. We will tell you whether it looks like something we can help with, usually within one business day.
Submit Deal DetailsNot ready to submit? You can build a one-page deal brief in three minutes first.
Or just call: 801-706-2802