Refinancing
Refinancing A Commercial Mortgage
Find out more about mortgage options for refinancing your Property.
There are a variety of reasons a business or commercial real estate owner may look to refinance their property. Some may be looking to refinance their real estate to help reduce a debt strain that their current mortgage may be causing their business and operations. Others may be looking to extend a term of their mortgage – particularly commercial real estate owners that currently have a bridge loan or hard money loan that will soon be up for renewal or payoff. And then there are others that have commercial real estate with substantial value (more than their current mortgage balance) that is simply looking to tap into the real estate’s equity to use for other business purposes (general operating capital, build-outs, tenant improvements). At ADM Financial Group we provide the best quality service to our clients without wasting their precious time.
What You Should Know About Refinancing A Commercial Mortgage
A commercial mortgage is simply a business loan that is secured by a business’s property. Properties that use commercial mortgages include owner-user business real estate (like office buildings, retail store buildings, warehouses, industrial buildings and factories) as well as development and investment real estate (such as apartment buildings and other rental properties).
How Does a Commercial Mortgage Work
ADM Financial Group will begin the process of providing a commercial mortgage by first checking the value of the real estate collateral, as well as analyzing the commercial real estate’s (and business) cash flow and revenue. These will enable our company to provide the best structure of the loans, and how much financing we are willing to provide as compared to the value of the property. While most long-term commercial property mortgage loans can have terms ranging from 10-25 years.
Why Would a Business Refinance a Commercial Mortgage?
Lower Rates: Taking advantage of lower rates is a great way for businesses to save money on the cost of their mortgage. If you have an adjustable-rate mortgage on your commercial property and market rates drop, you may want to refinance your current mortgage into a mortgage with a lower rate – which could save you money.
Longer Terms: By lengthening the terms of your mortgage, you may be able to reduce your monthly mortgage payments tremendously. Extending a term from 3 years to 25 years will dramatically reduce monthly payments, and may relieve strain on the small business’s cash-flow.
Avoiding Balloon: One structure of a mortgage is to have smaller monthly payments during the term, and at the end of the term the full remaining amount will be due, leaving the business with a massive payment to make. Rather than get stuck making such payment, many commercial property owners will refinance their mortgage before such balloon payment becomes due.
Cash-Out/Build-Out: If a commercial property’s value is worth much more than the current mortgage balance, the property owner could tap into that equity by getting a cash-out refinance loan. A cash-out loan is especially helpful for commercial real estate owners looking to build-out a property, to help with tenant improvements, or to use for other working capital uses.