Bridge financing is short-term funding that carries you until a specific event : a sale, a refinance, a longer facility : provides the payoff. Used well, it unlocks opportunities timing would otherwise block. Used carelessly, it's an expensive way to postpone a problem.
The difference is almost entirely about the exit.
Good bridge situations
- Buying the new property before the old one sells, with the sale genuinely in motion
- A refinance that's approved but not yet closed
- A property that doesn't qualify for conventional financing until a defined renovation completes
- A time-sensitive purchase where waiting means losing the deal
Situations where a bridge is the wrong tool
- The exit is 'the market will probably improve'
- There's no defined event that produces the payoff
- The timeline is already optimistic before any delays
- The cost of the bridge erodes most of the opportunity's value
Stress-test the timeline before you sign
Take your exit estimate and add margin : sales slip, closings delay, inspections find things. Then ask the provider specifically: what does an extension cost, and how hard is it to get? A bridge you can't exit on schedule is a completely different transaction than the one you signed up for.
Frequently Asked Questions
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If this topic relates to a funding need you have, you can begin a funding request through Kennify's financing partner at any time.