4 Big Points to Consider Before Refinancing Your Commercial Loan

When undertaking the commercial refinancing process, you’ll likely have a number of questions about how to secure the best value for your money. There are a number of steps that must be taken to ensure a clear path to successful refinancing. In this new post, we’ll explore the commercial refinancing process in greater detail and explain what you need to know.

1.    Review the Requirements of the Lender

Before refinancing, you’ll want to consider the requirements of your lender for the refinancing process. What limitations does the lender place on you as the mortgage holder, and how do these limitations impact the refinancing? For example, some lenders require that the property holder has owned the property for at least 12 months before beginning the refinancing process. Others will require the property to be owner-occupied, so if you’re leasing the property out to a business, you may have more difficulty obtaining a new loan. Review the requirements of the lender before moving forward with the process.

2.    Consider the Types of Refinancing

There are several types of commercial refinancing a business owner can undertake. For example, one of the more common options is a cash-out refinance. This tactic allows you as the property owner to access a percentage of the cash value of the equity in the property in the form of a loan. The cash can then be used to improve the property to increase its value and its potential for revenue generation. Review the full range of refinancing options with your lender.

3.    Differences between Commercial Refinancing and Home Refinancing

If you’re used to working with residential lenders, you might also consider the major differences between commercial refinancing and home refinancing. For example, homeowners depend on their credit score and past payment history, whereas commercial refinancing is largely dependent on the NOI of the property itself. NOI (Net Operating Income) is the income derived from a property minus the expenses of managing that property. The commercial lender will review the NOI closely before deciding on the loan.

4.    Review the Fees and Fine Print

One of the minimum requirements for the refinancing process is a new appraisal. The property appraisal will determine the value the lender places on the refinancing. A lender’s fees may also be a hindrance when deciding whether or not to refinance.

If you do some research, you can identify lenders who reduce certain fees or remove them altogether. Above all, search for a lender that values transparency when it comes to fees. You can make an educated decision if you have all the necessary information in front of you.

By taking a closer look at the details of the refinancing process, you can make distinct savings and put yourself in a position to achieve your long-term financial goals. Our trusted team has decades of experience in the commercial lending field, and we can help you save money when refinancing your building. Apply now to see how much you can save.