Though refinancing a mortgage leads to penalties for prepayment and breaking the contract, there can be many benefits if you refinance and enter into a financially better mortgage product.
Lower interest rates coupled with flexible terms and conditions can benefit your business and help you save thousands of dollars.
You can draw many benefits from getting your commercial mortgage refinanced. It is advised to get in touch with experienced commercial real estate lawyers for expert advice and understand the complete cost analysis before you decide on it for your business.
When Should You Consider Commercial Mortgage Refinancing
Professional mortgage brokers can assist in understanding the options available to you in commercial mortgage refinancing. There can be different reasons for you to consider commercial mortgage refinancing.
Reduce the cost of borrowing
With a lower interest rate, you can lock in your mortgage for a longer term. Apart from reducing your cost of borrowing, it helps you secure a smaller mortgage payment and long-term security. If you consider the entire life of the commercial mortgage, you can potentially end up saving thousands of dollars.
Lower your monthly debt payments and consolidate all your debts when you choose to consider commercial mortgage refinancing. It can allow you to secure more favourable terms and conditions for all your business debts.
You have the opportunity to consolidate debts including loans, credit cards, or lines of credit and all other high-interest rate debts which your business may have accumulated. Improve your cash flow and lower your total monthly payments with commercial mortgage refinance.
Leverage and Growth
With time, your growing business is likely to require increased space, enhanced equipment and upgrades for its operations. Commercial mortgage refinancing allows you to take the business equity and leverage it to help expand business operations and increase assets.
Enhance Cash Flow
A primary reason an owner refinances his/her commercial property is to improve cash flow. By taking advantage of the current interest rate environment, borrowers can reduce their annual debt service resulting in additional cash flow. Also, there is the ability to reloading the amortization up to 30 years.
You can recoup equity by refinancing your commercial properties. The cashing out process can substantially assist in freeing up working capital for your other ongoing projects.
Factors to note in Commercial Mortgage Refinancing
The reasons for considering commercial mortgage refinancing may be similar to the reasoning for residential mortgage refinancing, but the process itself is very different.
Commercial appraisals are substantially costlier than residential appraisals. Associated reports such as updated surveys, environmental reports and all other administrative refinancing costs are much higher.
- The rate movement differential in commercial and residential markets should be considered before you opt in for commercial mortgage refinancing. The level of perceived risk is much higher in commercial property which gives rise to higher commercial rates as compared to the perceived risk in a residential property. Thus, your prepayment penalties will be higher in case of the commercial mortgage than a residential mortgage for the same value of mortgage.
- The historically low-interest rate scenarios have not been reflected so well in the commercial market as the adoption in the residential market. Thus, the cost saving in commercial markets will be much lesser than the potential savings in the residential market.
Whether you have done commercial mortgage refinancing before or not, it is advisable to take the support of reliable commercial real estate lawyers to understand all your options and navigate this complex landscape.
How We Can Help
At Nanda & Associate Lawyers, our experienced Real Estate lawyers understand your specific circumstances and provide tailored and customized solutions for each of them.
Our Mississauga Real Estate Lawyers are available for a no-obligation free consultation. Come and experience our quality legal counsel and personalized care we give to each client. We ensure prompt communication and a professional approach to achieve successful outcomes for you.
Feel comfortable interacting with our caring team who speak more than 15 languages like English, French, Spanish, Italian, Portuguese, Albanian, Hindi, Punjabi, Kannada, Telugu, Tamil, Bengali and much more.