Do you currently own a small business or a commercial property, and interested in getting a better mortgage term or rate on your existing loan? Refinancing a commercial loan can help a borrower save a significant amount of money, as well as increase the equity of a property. If you are located in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, and are trying to determine a suitable refinancing option for your situation, Foundation Mortgage is here to help. Read on to learn more about how to refinance a commercial loan.
How Does a Commercial Loan Work?
Commercial mortgages are intended to help a business cover operating costs, including funding the payroll, the purchase of equipment and supplies, and other maintenance expenses. With this type of loan, the owner of a company is usually required to utilize the property itself as collateral in order to protect a lender in the event that a borrower is unable to make mortgage payments and defaults on the loan. When a borrower applies for a commercial loan, a lender will also evaluate the incoming revenue of a business, in addition to the value of the property. Commercial loans are typically used to help purchase rental properties, retail stores, office or industrial buildings, warehouses, etc. The terms and rates for a commercial loan do vary, however, terms typically last between ten to twenty-five years.
Advantages of Refinancing a Commercial Loan
There are several benefits to refinancing a commercial loan. First of all, borrowers that choose to refinance can save a substantial amount of money with lower interest rates and longer terms; by extending the terms of the mortgage, it can significantly lower the amount that is owed for each monthly mortgage payment. Commercial loans are generally designed for a borrower to make a lower payment amount during the mortgage’s term, and then pay the remaining balance of the loan off when a larger payment becomes due. This tends to place a fair amount of monetary strain on a business, however, a commercial refinance allows a borrower to avoid having to pay off the large remaining end payment required by the existing mortgage. Borrowers can also choose a cash-out refinance on a commercial loan, which allows for the opportunity to make renovations and other improvements to a property, which could also help increase income by allowing a justifiable increase in rent, etc.
Commercial Loan Refinance Eligibility Requirements
Although the eligibility requirements for a commercial loan refinance do vary, the most common qualification criteria include:
- A credit report from your business
- You must have owned the business for at least twelve months
- A term range of ten to twenty-five years is required
- A review of the property’s value will be required
If you are interested in a commercial loan refinance in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, contact Foundation Mortgage today for a consultation.