Refinance and Reuse
If your loan is about to come to an end, it is time to consider putting that property to better use. If you have been paying a high interest rate, it is time to find a lender who will give lower interest and pay off the balance amount. This is called commercial property refinance.
How Does It Work?
Refinance on an existing property, which is still under a mortgage can be done if you have paid off at least 60-70% of the loan. But this percentage varies. There are some special lenders who are willing to extend this Loan to Value Ratio. Of course, the more they pay you, the more the risk and hence a higher interest rate.
Why Should I Get A Refinance?
One straightforward reason is to get a lower interest rate. Why should you continue to pay a higher interest when you can get a lower rate for the balance amount? We should remember that interest rates are all negotiable. So, you could try for the best rates
You may be paying some processing fee for the refinance. But it is still worth considering the amount you will be saving on interest. This is beneficial in the long run.
Some lenders will give you cash on the refinance. This can be used for the purchase of new property, expansion of your business or renovation of the property. Most lenders will give cash for these purposes. You could check with any private money lender.
You may be able to squeeze some rebate out of the new lender. They may pay your stamp duty if they find some other lender is approaching you.
You may be having a tough time with your existing lender, especially if you are running your business from that property. This is a good chance to change to a lender who will understand your business emergencies and be lenient.
How Costly Is It?
There are some fees for the refinance like the loan application fee, valuation fee etc. Check the fees with private lenders and find out whether it is economical. They will give you the right rates at affordable charges.