Commercial property refinancing can be complicated for those with limited experience in the lending marketplace. That’s why many are now turning to trusted lending experts for information they can use to find success.
The team at Commercial Direct, a division of Silver Hill Funding, LLC (the lender), has decades of experience in the commercial lending marketplace and can help you find a refinance solution that meets the greatest number of your needs. In this post, we’ll tell you what you need to know about refinancing a commercial property.
Consider the Loan-to-Value Ratio
The LTV offered to you by a commercial lender translates directly to how much you can borrower with your loan. It represents the maximum level of risk a lender wants to take on with your loan. A higher LTV represents a riskier loan for your commercial mortgage lender, and a lower LTV represents a “safer” loan.
Before securing a loan, you need to know two things to understand what to expect from your LTV: your desired loan amount and the value of the investment property you are hoping to refinance. Keep in mind that most commercial lenders require a down payment between 20% and 30% of the property purchase price.
Maximum LTVs vary for commercial lenders. Borrowers who partner with Commercial Direct can achieve a maximum LTV of 80% on commercial loans.
Review the Financing Charges
One area that many commercial property owners fail to consider is the finance charges on their loan. The refinancing origination fee for the new mortgage and the appraisal fee can be considerable, and it’s critical you take these fees into consideration when evaluating your full range of commercial loan options.
Pinpoint Interest Rate Changes
Interest rates are continually changing based on the economy and on the financial strength of the lenders. But your personal interest rate is largely based on your financial history and the revenue your commercial property generates.
If you can’t show a high enough income within your property, the interest rates for the commercial loan might be considerably higher than you expected. Take into consideration your current interest rate and how this rate might change with your new loan. That can give you an indication of the cost of the loan and the value the loan provides in the years ahead.
Get Help Early in the Process
A leading mistake that many commercial property owners make is that they wait until the last minute to review and compare the available options.
This can often mean that you’re facing a mountain of paperwork with little understanding about the process. There are many challenging concepts to understand as you wade through the commercial property refinancing process, and if you don’t work with experts from the earliest phases, you’ll find the process takes twice as long and costs you far more money than you anticipated.
If your current loan has a balloon note at the end of the term, you could also put yourself in danger of having to make a very expensive payment if you do not find a refinance solution in time.
The best course of action is to start researching refinance solutions far in advance. That way, you can take your time and compare your options without having to worry about making a quick decision that could negatively impact your future.
Our experienced team can help you understand the commercial property refinancing process and put you in a better position to get a commercial loan that works for you. To find out exactly how much you can save, please apply through our team today!