As a commercial real estate investor, you know the importance of acquiring the best possible terms and interest rates for your mortgage. If you’re looking for ways to save money and reduce your long-term debt, refinancing your loan may be a viable option for you.

Attractive Interest Rates

There are many types of commercial mortgages, and interest rates will vary, depending on your specific financing. If you currently have a variable rate, you may benefit from locking in a lower fixed rate of interest. As the market changes and rates drop, you can keep more money in your pocket by lowering your monthly payment. If your mortgage is set to mature in the next few years, you may be able to profit from paying off the loan early. Even if your current terms include a prepayment penalty, your savings on interest can offset those expenses and make refinancing your commercial real estate worth your while.

Better Terms

Depending on your financial goals and needs, changing your repayment terms through refinancing can be beneficial. If you are hoping to pay off your debt sooner, you can consider shortening your terms, such as changing from a 30-year mortgage to one with 15-year terms. While your monthly payment may increase, many lenders offer attractive interest rates for shorter loans, and this can minimize your costs. On the other hand, you may be seeking a longer repayment period, and refinancing can allow you to extend your terms, lowering your payments and boosting your cash on hand.

Unlock Your Equity

If the value of your commercial real estate is greater than the principal of your mortgage, you can refinance with a cash-out loan to pull out the equity. You can use this lump sum to make improvements to your property and further increase its value, or you may want to consider making another investment with the money.

Sidestep a Balloon

Many commercial mortgages are structured so that only a portion of the principal is amortized for the length of the loan. This repayment term is usually short, and at the end of the loan, a hefty payment is due. If you are facing a large balloon payment, you can refinance the mortgage to avoid draining your financial resources.

Commercial real estate can be a highly profitable investment, and making smart decisions about financing is critical to your success. Consider refinancing your mortgage to lock in favorable interest rates and terms or to tap into your valuable equity.