Serious question, did you know some bridge loans can have a 15% origination fee?

I was reading a case study from a firm in Chicago about a fix-and-flip deal, and they mentioned the lender charged a 15 point origination fee on top of the interest. That's like paying a huge chunk of the loan amount just to get it, which seems wild to me. Has anyone else seen fees that high on a short-term loan, or was that just a really bad deal?

3 comments

3 Comments

seanlee14d ago

Used to think those fees were just for people who didn't shop around. Reading that Chicago case study made me realize some lenders just charge that much for the speed and risk. It's a tough pill to swallow.

joseph_torres14d ago

Look at it from the lender's side. They're putting up cash fast for a risky project that banks won't touch. That 15% fee buys you speed and a yes when everyone else says no. If the deal makes enough profit, the fee is just a cost of doing business. Calling it a bad deal misses the point that this money was never available any other way. Sometimes you pay a premium for the only tool that gets the job done.

felix_lane9914d ago

Honestly, what if the high fee was actually a way to avoid breaking local usury laws on the interest rate itself?