Refinancing

Commercial Loan Refinancing

Refinancing commercial real estate is much different than the process of refinancing residential properties purchased for personal use and enjoyment.

Commercial real estate is intended to generate income, and that income is what underlies the value of the property. Generally, the more revenue a property generates, the more favorable are the loan terms offered by lenders.

Investors place debt on a property at the time of purchase, but there are several reasons why they almost always end up refinancing down the line.

Commercial Refinance Loan Terms and Rates

Commercial loan interest rates are typically higher than residential mortgage rates. In the off-case scenario that the owner occupies the commercial property the interest rate may be a bit lower.

It is worth mentioning that commercial real estate lenders usually don’t refer to interest rates as percentages. Instead, you may hear a lender use the term “basis points.” A basis point is equal to 0.01%. So if a rate goes up or down 25 basis points, it means that it has increased or decreased by .25%.

Why Is Refinancing important?

1. Why not have the extra cash?
2. Invest back into the asset ( update property )
3. Expand your portfolio
4. Lower interest rates
5. Get better terms