Have You Considered Commercial Property Loan Restructuring?

Whether you are purchasing a property for your business or for real estate, owning your own property will be one of the best decisions you ever made in life. Commercial mortgage is a form of financing that is availed to qualified people for the purpose of purchasing property. The payment terms for this source of property loan are strict, and demand that you make the agreed monthly payments dedicatedly until you have paid off all the loan inclusive of the interest acquired.

Commercial Property Loan Restructuring

A commercial loan restructuring or modification is an agreement made with the lender to renegotiate the terms of the loan. This agreement offers the borrower an opportunity to decrease the monthly repayment amount, capitalize on the popular low interest rates, and extend the time period for paying off the loan.

Benefits of Commercial Loan Restructuring

Businesses can take advantage of commercial mortgages to release equity for investing or expanding the business. Obtaining capital for a business expansion can be frustrating since lenders are often timid to support a rapidly expanding business. Refinancing an existing commercial mortgage can therefore be a great way of releasing the needed equity.

Commercial mortgage modification can also be used for lowering your monthly repayment rates, or consolidating your debts. You can borrow against the amount you put in property investment and pay off all your other debts so that you only have the mortgage loan to deal with. This can be particularly helpful in hard economic times for your business.

Pitfalls of Commercial Loan Restructuring

While loan restructuring presents attractive benefits, there are certain downsides of this agreement that a borrower should be knowledgeable before taking this step.

During a commercial loan restructuring deal, the loan principal can be forgiven or reduced. Consequently, there will be a cancellation of indebtedness and the borrower will go back to their ordinary income that attract taxes. Before taking a commercial loan modification deal, a borrower should factor in the potential tax liability so that they are not thrown off-guard by it.

A loan restructuring deal also gives the lender an opportunity to obtain extra cash infusion, collateral or guarantee into the project. Moreover, to avoid losses of an under-performing loan, a lender may also seek more control over the operations of the business.