Short answer: a balloon coming due is a planning event, not a fire drill. Start 9 to 18 months out and you get to run the market and choose. Your main paths are a refinance into permanent debt, a bridge loan to buy time to stabilize or improve your terms, a sale, or a negotiated extension. The owners who open the conversation early are the ones who close on the best terms.
If you have a maturity date on the calendar, you're already ahead of most owners, who tend to look up six weeks out. The whole game here is time. Time is what lets you line up more than one option, put lenders in competition, and pick the structure that fits where the property is actually headed. Here's how to think about a $5M–$30M commercial balloon coming due, and the routes worth weighing.
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Map your refinance options →What a balloon payment actually is, and why the maturity date matters
Most commercial real estate loans aren't built to pay themselves off. The payment schedule amortizes over something like 25 or 30 years, but the loan matures in five, seven, or ten. When it matures, the remaining balance comes due in one lump: the balloon. It doesn't mean anything went wrong. It's just how the structure was written on day one. The maturity date is simply the day you refinance, sell, or otherwise retire that balance, and it's been on the docket since you signed. Knowing the date is coming is exactly what puts you in control of it.
How early should I start planning for a balloon payment?
Start 9 to 18 months before maturity. An appraisal, updated financials, and underwriting all take time, and while a clean file can close in 15 to 30 days once terms are set, reaching those terms takes longer. Early, you can gather competing quotes, tune the file, and let the property's numbers work for you. Wait until 60 days out and your leverage evaporates, because now you're a borrower with a clock, and lenders can read a clock. Early planning isn't caution. It's how you keep the negotiating power on your side of the table.
What are my options when a commercial balloon comes due?
There are four real paths, and the right one depends on the property, your plans for it, and the terms you can command today. Most owners weigh two or three of these at once, which is the point of starting early.
Refinance into permanent financing
The most common path. You replace the maturing loan with a new long-term loan and reset the clock, ideally on better terms than a rushed deal would give you. This is the cleanest route when the property is stabilized, the income supports the debt, and you plan to hold. The variable worth knowing early is where today's rate environment leaves your proceeds, which we'll get to below.
Use a bridge loan to buy time
When permanent financing isn't the best deal available yet, a bridge loan gives you room to get there. A commercial bridge loan is short-term financing, usually 6 to 24 months, that retires the balloon now and gives you a defined window to stabilize occupancy, finish a value-add plan, season the rent roll, or simply wait for a better moment to lock permanent debt. It's the bridge between where the property is and where it needs to be to earn its best long-term terms. It carries a higher rate than permanent financing, which is the cost of the flexibility and the time.
Sell the property
Sometimes the balloon is a natural checkpoint to take gains and move on, especially if the asset has appreciated, your plan for it is complete, or your portfolio strategy has shifted. Deciding this early lets you sell on your schedule and into your chosen market, rather than listing against a deadline. And if a sale is the plan but the timing needs to move, a bridge can hold the position while you run a proper process.
Negotiate an extension with the current lender
Your existing lender may offer to extend the maturity, and in the right spot that's a useful tool. Just be clear on what an extension is and isn't. It's a short reprieve, often on the lender's terms, and it doesn't reset your position or open the property to the wider market. An extension buys days. It doesn't buy you better financing, and it quietly hands the pricing pen to the one lender who already holds your loan. Treat an extension as a tactic inside a plan, not as the plan itself.
Balloon payment options, side by side
| Option | Best when | What it does for you |
|---|---|---|
| Refinance to permanent | Property is stabilized, income supports the debt, you plan to hold | Resets the clock on long-term terms; ends the balloon cycle for years |
| Bridge loan | Not stabilized yet, mid value-add, or terms will improve with a little time | Retires the balloon now; buys 6–24 months to earn better permanent terms |
| Sale | Asset has appreciated, your plan is complete, or strategy has shifted | Captures gains on your schedule instead of against a deadline |
| Extension | You need a short, defined reprieve and the lender's terms are fair | Buys days, not better financing; keeps the pricing pen with your current lender |
Structures shown are typical, not a quote or commitment; actual terms are set by third-party lenders subject to underwriting. See disclosures.
How does today's rate environment change the refinance math?
Here's the piece that surprises owners. Many commercial loans maturing now were written in a lower-rate stretch. Refinancing into today's higher-rate environment can mean a higher coupon than the loan you're retiring, and because commercial proceeds are sized off the property's cash flow and its ability to cover debt service, a higher rate can size a smaller loan than the balance you owe. That gap is exactly why you want lead time. With 9 to 18 months you can improve net operating income, shop the full market for the lender pricing your asset most favorably, or use a bridge to stabilize before you lock long-term debt. With 60 days you can't do any of that. Rates move and I won't guess at numbers here, but the lesson holds: the earlier you run the math, the more levers you have to pull.
Where a bridge fits when permanent financing isn't ready
A bridge loan isn't a fallback. It's a deliberate move for the gap between the balloon and the best permanent terms you can eventually get. Maybe occupancy dipped during a renovation, or the rent roll hasn't caught up to a below-market buy, or you're one lease signing away from the numbers that unlock strong permanent debt. A bridge retires the maturing loan, hands you a defined runway, and lets you execute the plan that earns better long-term financing. Then you refinance into permanent debt at terms the property has grown into, rather than the terms the calendar would have forced. Underwriting leans on the asset, your equity, and a clear exit, so a clean file can close in 15 to 30 days. See how we structure these on our commercial bridge loans page.
Why work the balloon through a broker
Your current lender knows one answer: theirs. Going back to them alone, or walking into a single bank, gives you one institution's appetite on one day, which is not the market. A broker runs the property to the lenders most likely to want it and makes them compete, and competition on the same file is what gives you real leverage on rate, proceeds, and structure. At Northern Ridge Capital that means matching your maturing loan to the right source from a network of 700+ banks, credit unions, debt funds, life companies, agency lenders, and private capital. We're a broker, not a lender, so our job is your best option, not our own balance sheet. And because we start when you start, we can line up several paths and let you choose from strength. Start early, run the market, and more competing options turn into better terms.
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Book a 15-minute call → or submit your dealFrequently asked questions
How far in advance should I refinance a commercial balloon payment?
Start 9 to 18 months before maturity. That runway lets you order an appraisal, update financials, gather competing quotes, and improve the property's numbers if needed, so you negotiate from strength. Once terms are set, a clean file typically closes in 15 to 30 days, but reaching the best terms takes lead time. The earlier you start, the more options you keep.
What happens when a commercial loan balloon comes due?
The remaining balance comes due in one payment on the maturity date. You retire it by refinancing into a new loan, using a bridge loan to buy time, selling the property, or negotiating an extension. This is a planned checkpoint that's been part of the loan since origination, and starting early lets you choose the path rather than take the only one left at the deadline.
Can I use a bridge loan to refinance a balloon payment?
Yes, and it's a common, deliberate move. A bridge loan retires the maturing balloon and gives you 6 to 24 months to stabilize occupancy, finish a value-add plan, or wait for better permanent terms. You then refinance into permanent debt on your own schedule. It carries a higher rate than permanent financing, which is the cost of the time and flexibility it buys.
Is a loan extension a good option for a balloon payment?
An extension can be a useful short-term tactic, but it isn't a plan. It buys days on the current lender's terms and doesn't open your property to the wider market or reset your negotiating position. Use it as one tool inside a broader strategy, not as the strategy itself, and only when the terms are genuinely fair.
What size loans does Northern Ridge Capital refinance?
Northern Ridge Capital places $5M–$30M in commercial real estate debt across multifamily, retail, industrial, and other commercial property types, matching each maturing loan to the right source from a network of 700+ lenders and typically closing in 15–30 days once terms are set. We're a broker, not a lender, and we work commercial real estate only.
The bottom line
A balloon coming due rewards the owner who plans. Give yourself 9 to 18 months and you get to weigh a permanent refinance, a bridge, a sale, or an extension against each other, run the property to a full market, and close on terms you chose rather than terms the calendar handed you. That's the whole advantage of starting early, and it's yours to take. Bring me the loan and the property and I'll map the paths against your timeline.
Let's plan your balloon before it plans you.
Talk to Northern Ridge Capital →Northern Ridge Capital is a commercial mortgage brokerage (a broker, not a lender), arranging financing on commercial real estate only, not residential or owner-occupied consumer property. Justin Ashcraft, Principal · CA DRE #02093377. We work only within our licensed footprint. Structures and figures shown are typical and are not a quote, offer, or indication of terms. Nothing here is financial, legal, or tax advice.