What You Need to Know About Commercial Refinancing
Obviously, you want to use your commercial equity to:
- Expand your company’s cash flow
- Purchase inventory to expand
- Or even grow your business to a new location
A commercial refinance may be a good option for any growing business.
Firstly, when looking at a commercial refinance, the property and business are weighed more heavily than the borrower that owns the property.
The borrower’s previous experience running the business is also taken into consideration.
Secondly, many lenders require a business that can sustain itself based on a Debt-Service Ratio (DSR). The overall income in your application generated by the property should be able to service 125% of the mortgage, property taxes, and utilities annually.
Thirdly, the interest you pay for these types of products is also always based on the risk appetite of the lending institution.
Overall income generated by the property should be able to service 125%
Secondly, a commercial refinance is comparable to a purchase in the sense that you may not be able to access as much equity as a traditional mortgage. These properties are not as easy to market and are geared more toward a specific purpose. In addition, many lenders may scale back the overall Loan to Value (LTV) to between 65%-75% of the property value.
Finally, through a commercial refinance can obtain
- A strong tool that many business owners can use to improve their building cash flow
- Growth in the business owner’s portfolio
- A sensible solution for those who may have purchased a distressed property
- A sure way to connect with a knowledgeable mortgage agent or broker that can provide the right services and products
There are plenty of options available, so let a Mortgage Suite Broker/Agent put you on the right path. We’re here to chat anytime.
