This podcast addresses the maturity of both commercial and residential bridge loans. The maturity is the length of time that the loan can be outstanding before it must be repaid. The range of maturities is 6 months to three years, depending on product type.
Investors need to be very mindful of maturity because the lender generally cannot accelerate the repayment of a loan. If the lender needs liquidity prior to a loan being repaid, the only option is to sell the loan which might require some discounting as an inducement to other investors. Of course there is no guarantee that a loan will be repaid on its maturity date.
The investor needs to be prepared to foreclose on any loan if necessary, and subsequently sell the underlying property to recoup principal and interest, which generally would add six to 12 months to the investment time horizon on top of the maturity of the loan.