A commercial mortgage is not a thirty year residential loan. It was almost certainly written on a shorter term with a longer amortisation, which means that on the maturity date the entire remaining balance falls due at once. The bank is not obliged to renew, and increasingly does not.
This is the most common serious problem in commercial property finance and it is almost always survivable. What decides the outcome is not the size of the balance. It is how much time is left when you start.
Why the refinance is harder this time
Most borrowers assume a renewal is administrative, because the last one was. Four things commonly change that.
Rates are higher than when your loan was written, and the same net operating income now supports a smaller loan, which can leave a gap between the new proceeds and the old balance regardless of how well the property performs. Values in some segments have moved. Your bank may be reducing its concentration in your property type as a portfolio decision, which has nothing to do with you. And if a significant tenant is now nearer their lease expiry, underwriting treats that as risk in a way it did not five years ago.
The five routes out
Refinance with a different bank or credit union
The obvious route, and the right one if the property still services the debt at today's rates. Credit unions and smaller regional banks are frequently more willing than the institution that just declined to renew, because the incumbent may be exiting the asset class rather than judging your property.
Realistic timeline: sixty to ninety days from application, longer if a new appraisal and environmental report are required. Start at least six months out.
A DSCR or non-bank permanent loan
Underwrites whether the rent covers the payment rather than what your returns show. That distinction matters for investors who report little personal income, and for owners whose last two years look worse on paper than the property actually performs.
More expensive than bank paper and considerably faster. Usually thirty to forty five days.
A bridge loan
Short term debt against the property that closes in days or a few weeks, pays off the maturing loan, and gives you six to twenty four months to arrange permanent financing or to sell in an orderly way rather than a forced one.
You pay for the speed, in rate and in points. It is the right answer against a hard maturity date and the wrong answer as a substitute for solving the underlying problem.
A sale leaseback, if you occupy the building
If your own business operates from the property, selling it to an investor and leasing it back retires the mortgage entirely and releases the equity as working capital. The balloon problem disappears rather than being refinanced.
You give up future appreciation and take on a long lease, so model it properly. We have done these, and there is more on the sale leaseback page.
Extension or modification with the existing lender
Banks generally prefer a performing loan to a foreclosed asset. If you have paid on time and the shortfall is a valuation or rate problem rather than a performance problem, a short extension or a modification is often available. It is rarely offered unprompted, which is why it has to be asked for.
Ask early, in writing, with a credible plan attached. Asking thirty days out reads as distress. Asking nine months out reads as management.
The clock decides which routes stay open
This is the part borrowers get wrong. Every month you wait removes an option, and the ones that disappear first are the cheap ones.
Twelve months out
The widest set of options you will ever have. Order a current rent roll and operating statement, get an informal broker opinion of value, and find out whether your existing lender intends to renew. That last question is free to ask and changes everything that follows.
Six months out
Start the refinance application now if you are going to bank it. This is the last comfortable point at which a conventional refinance can complete without drama.
Ninety days out
If no permanent financing is approved by now, run the bridge conversation in parallel rather than after. Bridge lenders can close in this window. Banks cannot.
Thirty days out
Bridge, sale, or an extension. Be direct with the existing lender about which one you are pursuing, because a lender who knows the plan behaves very differently from one who is guessing.
Already past maturity
You are likely in technical default with default interest accruing, and possibly late fees. It is recoverable and it is not the end. Move quickly, and tell whoever you bring in exactly where you stand rather than discovering it in underwriting.
What to have ready
A current rent roll. Trailing twelve months of operating statements. Your existing note and any maturity or default notice. A personal financial statement. A debt schedule covering everything outstanding. Assembling these before the first conversation rather than during it is worth about two weeks of calendar, and two weeks matters a great deal at ninety days out.
Common questions
What actually happens on the maturity date if I cannot pay?
The full outstanding balance becomes due. If it is not paid the loan is in maturity default, which typically triggers default interest at a materially higher rate and starts the lender's remedies, including the right to begin foreclosure. Most lenders do not move on day one, and the window varies by lender and by state, but the leverage shifts to them immediately. Do not treat silence as an extension.
Why can I not just refinance like last time?
Usually one of four things. Rates are higher than when the loan was written, so the same net operating income supports a smaller loan. Values in your segment may have moved. Your bank may be reducing its exposure to your property type regardless of your performance. Or a major tenant is closer to their own lease expiry than they were, which underwriters treat as risk.
Will the bank really foreclose over a balloon?
Lenders would generally rather have a performing loan than an asset to manage and sell, so a borrower with a credible plan and a payment history is usually met with a conversation. That is very different from a guarantee, and it depends heavily on the lender and the property. The way to keep that conversation available is to open it early.
Can I get a bridge loan if I am already in default?
Often yes. Bridge lenders price the property and the exit rather than the borrower's current standing, and a maturity default with an otherwise performing asset is a familiar situation to them. Expect to pay for it, expect a real appraisal, and expect them to want to see the takeout.
What will a lender want to see?
A current rent roll, trailing twelve months of operating statements, your existing note and the maturity notice, a personal financial statement, and a debt schedule. Having those assembled before you make the first call is worth roughly two weeks.
Tell me the maturity date and I will tell you what is still open
The date, the balance, and what the property earns is usually enough for a straight answer on which of the five routes are realistic. We have placed refinances like this and the sale leasebacks that replace them.
Start an applicationCall 914.419.3059The conversation and the review are free, and if we place the financing we charge a small fee at closing. Michael Weinberg, NTIB Finance and Consulting. This page is general information about commercial mortgage maturity, not legal advice and not a commitment to lend. Default consequences vary by loan document and by state, so read your note and speak to your attorney about your specific position.