Do you own a commercial property or a small business, and interested in getting a better rate or term on your current loan? A commercial loan refinance could help you both increase the equity of your property and help you save money. Foundation Mortgage can help you determine the best refinancing option for your situation in Knoxville, Maryville, Lenoir City, Oak Ridge, and Gatlinburg, Tennessee. Read on to learn more about how to refinance a commercial loan.
What Is a Commercial Loan?
A commercial mortgage aids businesses with overall operating costs, such as purchasing supplies and equipment, funding payroll, and other maintenance expenses. The types of properties that are generally associated with commercial loans are rental properties, office buildings, industrial buildings, retail stores, and warehouses. These types of loans typically require the business owner to use the property itself as collateral in order to protect the lender if the borrower defaults on the loan and is unable to make payments. Rates and terms for commercial loans will vary, but the terms usually last between 10 to 25 years. The lender will evaluate the amount of incoming cash and the revenue of the business, in addition to property value when a borrower applies for a commercial loan.
What Are the Benefits of Refinancing a Commercial Loan?
Refinancing a commercial loan can offer several advantages, and the most significant benefit is that borrowers who refinance are able to save money with longer loan terms and lower interest rates. Extending your mortgage to a longer term can lower the amount you owe on monthly payments considerably. If a borrower opts for a cash-out refinance, they can use the additional funds to make improvements on the property, which could allow a borrower to justifiably increase tenant rents, thus generating higher cash flow. Commercial mortgages are typically designed for a borrower to make lower payment amounts during the loan’s term, and then pay the remainder of the loan in full when it becomes due with a bigger payment. This normally results in a financial strain on a business, however, a commercial refinance helps you avoid paying the large remaining payment at the end of the current mortgage.
Requirements for a Commercial Loan Refinance
The requirements for a commercial loan refinance will vary, however, most refinances will require the following qualifications:
- A term range of 10 to 25 years
- A credit score report of the business
- You must own the business for at least 12 months
- The lender will want to review the available collateral of the property
Commercial Loan Refinance Assistance
If you are looking to save money with a commercial loan refinance in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, the loan specialists at Foundation Mortgage can help. Contact us today for a consultation.