When a hard money loan matures, the entire remaining balance — the balloon payment — comes due at once, and you have six possible moves: refinance into new financing, negotiate an extension, take a new bridge loan, sell the property, pay it off with cash, or negotiate the payoff itself. The right choice depends on three things: how many days you have left, whether the property is finished, and how much equity is at stake.
What you cannot do is nothing. A matured hard money loan is in maturity default even if you never missed a monthly payment, and most notes trigger default-rate interest and fees from that day forward. Here is each option, with its real trade-offs.
Option 1: Refinance into permanent financing
If the property is finished and rented (or rent-ready), refinancing is almost always the strongest play — it retires the balloon completely instead of postponing it. Investors qualifying on rental income use a DSCR refinance; those with strong documented income may prefer a conventional refinance. The full mechanics are in our pillar guide to refinancing out of hard money. Plan on two to six weeks, so this option needs runway.
Option 2: Negotiate an extension
Most hard money lenders will extend — for a price. Extensions are typically granted in 3-to-6-month blocks with an extension fee, sometimes a rate bump, and occasionally a required principal paydown. An extension makes sense when you are genuinely close (a sale under contract, a refinance in underwriting) and the fee is cheaper than the alternative. It is a trap when it just delays the same problem. We compare the math logic in extension vs. refinance.
Option 3: Replace it with a new bridge loan
When the property is not yet stabilized — mid-renovation, vacant, or not seasoned enough for permanent financing — a new bridge loan from a different lender pays off the maturing note and resets the clock with 12 to 24 months of term. Unlike an extension, it moves you away from a lender who may be losing patience, and it can sometimes include funds to finish the project. This is step one of the bridge-to-perm strategy.
Option 4: Sell the property
A sale pays the loan off and captures whatever equity exists — if you have time to market it properly. A forced 30-day sale is where equity goes to die: rushed pricing, cash-buyer discounts, and a lender charging default interest the whole time. If you want to keep the option of holding the asset, exhaust the refinance and bridge paths first; if selling is genuinely the plan, list before maturity, not after.
Option 5: Pay it off with cash or a partner
Some investors bring in a capital partner, tap equity in another property, or liquidate other assets to clear the balloon. This preserves the asset with no new debt, but it concentrates risk and often costs equity in the deal. It tends to make sense as a partial move — a principal paydown that makes an extension or refinance work — more than as the whole solution.
Option 6: Negotiate the payoff itself
When the numbers truly do not work, some lenders will negotiate — waiving default interest, discounting accrued fees, or agreeing to a structured payoff — because a clean payoff beats a foreclosure timeline for them too. This is a last-resort lane and it works far better with a credible refinance or sale in motion as leverage. If you are past due and the lender has stopped talking, read what actually happens in a hard money default so you know the sequence you are up against.
How to choose, by time remaining
- 90+ days out: refinance. You have time for the strongest, cheapest exit. Start now — the runway is the advantage.
- 30–90 days out: refinance on an expedited track, with a bridge loan as the backup and an extension quote in hand as insurance.
- Under 30 days: call the lender and request an extension quote while simultaneously starting a fast bridge or DSCR file. Speed lenders exist for exactly this window.
- Past maturity: everything above still applies, but default interest is accruing daily — a two-track plan (negotiate + refinance) beats either alone.
Get a maturity game plan today
The Cook Brothers team works maturity rescues nationwide and can usually tell you within a day which of the six options your deal actually supports. Start with the quick qualifier on our homepage — it takes about a minute.
Frequently Asked Questions
What happens if I just miss the balloon payment?
The loan enters maturity default. Most notes immediately apply a default interest rate and late fees, and the lender can begin foreclosure under the deed of trust or mortgage. You do not get a grace period the way you might with a missed monthly payment unless the note says so.
Will my hard money lender automatically extend my loan?
No. Extensions are discretionary. Many lenders grant them for a fee when the exit is credible, but some prefer to foreclose, especially when the property has substantial equity. Never build your plan on an extension you do not have in writing.
Can I refinance a hard money loan that is already past maturity?
Often yes. Bridge and DSCR lenders regularly pay off matured notes. Expect the default status and any accrued fees to be scrutinized, and act quickly — default interest grows the payoff daily and erodes the equity that qualifies you.
Is selling better than refinancing when the loan matures?
Only if selling was already the plan and you have time to market the property properly. A rushed sale under lender pressure usually sacrifices far more equity than a refinance costs. If the property performs as a rental, refinancing preserves both the asset and the upside.
Figures are typical market ranges, vary by lender and scenario, and are subject to change.