There are many ways that refinancing your commercial mortgage could save you money and even free up some capital. Because of today’s low interest rates, you could get a new mortgage with a lower rate and save on interest over the next few years. Here are 5 top reasons why real estate investors are refinancing their commercial investment property this year.
1. Cashing in on Today’s Low-Interest Rates
Interest rates today may still be low, but this great opportunity won’t last forever. In fact, rates are already on the rise, and those who don’t act quickly could miss out on the chance to save over the coming years. However, borrowers who do opt for a commercial loan refinance have the opportunity to lock into a lower rate and save over the coming years. Refinancing does come with additional fees, but you can weigh those against the amount you save on interest to determine whether a refinance makes sense or not.
3. Avoiding Substantial Balloon Payments
When you refinance a commercial loan, it presents a great opportunity to avoid having to pay the balloon payment—a lump sum that’s due at the end of a loan term when the remaining principal comes due. By refinancing, you can avoid having to come up with that lump sum and simply carry it forward to the new mortgage.
4. Taking Advantage of Your Equity for Other Projects
One option available when you refinance commercial real estate is a cash-out refinance. A cash-out refinance occurs when a borrower accesses equity from their existing mortgage by refinancing with a larger loan amount. The borrower repays the original loan amount, while the remainder becomes cash they can access for a number of business-related purposes. This can be ideal for owners and investors who need to pay off existing debt, improve their property, or simply access cash to make their next purchase.
5. Consolidating debt
Finally, refinancing your commercial mortgage now may allow you to consolidate multiple mortgages into a single loan. The major benefit of this is that you end up with a single monthly payment, and you might also be able to use the debt consolidation refinance to get better terms and rates, lower fees, and an extended amortization.
There are many benefits to refinancing a commercial mortgage – but the tactic isn’t the best option for every borrower. Contact Investment Property Loans now to learn about your options and determine a strategy that helps you meet your investment goals.