Are you considering refinancing your commercial property? If so, are you aware of the many benefits that come with a commercial property loan? Refinancing commercial property (CRE) can lower monthly mortgage payments, reduce debt, and possibly lower overall debt. When you refinance commercial property, you will use the money from a new commercial loan to pay off the outstanding balance on your current commercial mortgage. The money you receive from this unique commercial loan may be used for improvements or for downgrading the property to make it more marketable. Whatever the reason is that you are refinancing your commercial property, there are several things you must consider before you sign up for a loan.
Before you get started with your search for a Commercial Property Loan, have an idea of how much your total expenses are each month. Include any utilities, insurance premiums, phone and cable bills, personal expenses such as food and gasoline, repairs, home improvement costs, repairs to your office space, and other necessary expenses. Once you have determined how much you need to borrow, start evaluating the different commercial property loans available to you. Here are a few to get you started:
30 Years Fixed Rate Office Space- With no early redemption penalty, these are some of the most popular types of commercial property loans. You are locked into the interest rate for the entire 30 years or, if you choose until you sell the property. These loans also come with flexible terms that allow you to adjust the repayment option as your circumstances change over time.
Short Term Lower Interest Rate- Business owners who don’t anticipate expanding their business for several years might find these short-term commercial loans attractive. However, business owners who expect to grow their business over several years should probably look elsewhere. The commercial properties that banks offer these types of loans for are not nearly as attractive to investors. They carry a higher risk of default than regular residential loans. If you want to get one of these loans, the interest rate will be slightly higher than for a home loan.
Long-Term Mortgages- Commercial property investors are often attracted to these long-term loans. These loans offer a lower interest rate and longer repayment terms, but they have a higher risk of non-repayment. To protect their interests, lenders require that borrowers have a positive cash flow every year. The majority of lenders will require a business plan from the business owner before they will issue this type of commercial property loan.
For first-time investors or home buyers, some banks will offer both short-term and long-term commercial property loans. While it is possible to find these lenders who will make both kinds of loans available to you, it is usually best to choose one lender and then purchase one of these commercial property loans only when you have found a suitable deal. This way, you can focus all your attention on buying your property rather than searching for a commercial property loan in the process. It can take some time to find such a deal, so it makes sense to make sure you know where you will invest before you begin.
Business Mortgages- Commercial lenders differ from traditional home loan lenders in that they are specifically interested in making money rather than simply providing financing. This means that they will lend money to businesses that could earn them a high return on their investment. It is important to remember that even if a company can regularly repay the loan, it may still be considered a high-risk investment by some lenders. To ensure that you are not considered a high-risk investment, you must have a good credit history. If your credit score is low or you have had financial problems in the past, lenders will look at this to decide whether you are someone they want to lend to.
Finding the right lender is significant when looking to get a commercial property loan and getting an interest rate. Although there are many factors involved in choosing a lender, it can often seem like a maze. However, once you have located several lenders willing to lend to your selected businesses, you can compare the interest rates they offer to find the best interest rate. By getting quotes from different lenders, you can also determine what lenders will charge you based on your business’ location, industry standards, and more.