Refinance Commercial Property

Refinance commercial property as a means to reduce high interest rates or a longer term loan that are the direct cause of exorbitant amounts of interest being paid. One may also decide to obtain cash from the equity the property has built up. It is very important that that capital be reinvested in other commercial property or the interest paid on the new portion will not be tax deductible. If tracked to non-investment purchases, the cash-out portion is considered a consumer debt. Therefore the purpose defeats the tax deductible status of the entire loan.

There are many different commercial properties that can be refinanced. With good research and knowledge about geographic regulations, there should be no problem in finding out this information. It is important to weigh all options before making any financial decision. A trusted Christian financial advisor is a great first step in the right direction. Knowing what is desired for the end result is also important and should be shared with this advisor.

The type of loan should be carefully considered before committing to a large amount for a lengthy repayment. Consider the options of fixed rate loans and variable interest rate loans when preparing to refinance commercial property. Be sure to know if the variable rate loan has a cap and how often the rate is expected to vary. This will be determined by the investment index the rate is associated with - Treasury bills, LIBOR (London Interbank Offering Rate), and Certificate of Deposit rates tend to be volatile, while other indices change more slowly. Attempt to refinance with a lender who is willing to clarify their variable rates source and are able to help select one that varies with less volatility.

Another term of the loan that should be carefully observed is if it has a "due on sale" clause. This clause prevents the property from being sold to another party without the lender's approval. It is important when choosing to refinance commercial property to pay attention to the details of the mortgage terms. One must be "wise as serpents, but harmless doves" (Matthew 10:16). The "wolves" of many finance companies provide their services, but for a price to their advantage. It is expedient for the person who wishes to refinance commercial property to do their homework and know the terms as well as the options before approaching a lender with valuable commercial property at stake.

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