An exit fee is a fee charged by a bridge or debt-fund lender at loan payoff, typically 0.25% to 1.0% of original or current loan amount. The fee compensates the lender for losing the asset early. It is sometimes waived if the borrower refinances into a permanent loan with the same lender or its affiliate.
Why do bridge lenders charge exit fees?
Bridge lenders price for a 2 to 3 year holding period. If the asset stabilizes faster and the borrower refinances early, the lender loses the back-end yield they priced into the spread. The exit fee partially recovers that yield.
How is the exit fee structured?
Typically a percentage of original loan amount or of outstanding principal at payoff. Some lenders use a step-down (e.g. 1.0% in year 1, 0.50% in year 2, waived after year 2) to preserve yield while not penalizing long holds. A few lenders waive the exit fee entirely if the take-out is placed with the lender's perm desk.
Is the exit fee negotiable?
Yes, particularly on competitive deals or with relationship borrowers. The economically equivalent move is to push the spread down by the same amount of yield instead of carrying it as exit. Borrowers comparing term sheets should always normalize to all-in cost over the expected hold.
Sources
- Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations · Mortgage Bankers Association · 2026-Q1
- Multifamily Market Commentary · Fannie Mae Economic & Strategic Research · 2026-Q1