Some types of commercial real estate loans are not fully amortized over the life of the loan. Rather, there is a single large payment due at the end of the loan period, which is commonly referred to as a balloon payment. However, there are advantages to using this kind of loan program from Commercial Lending Corporation. For example, if you secure a 5 year fixed interest rate balloon mortgage with a 30 year amortization schedule, your monthly payments over the course of the loan period are based on the 30 year amortization schedule. If you required financing for $1 million, your monthly payments with a 5 percent fixed interest rate balloon loan would be approximately around $5,400, compared to around $18,900 for a conventional 5 year loan with a 5 percent fixed interest rate.
Because you are able to obtain lower monthly payments with a balloon loan program for a shorter period of time, it allows you to make financing investments into a variety of commercial property projects. For instance, if you are purchasing an older office building and plan to rehabilitate and modernize the facility, you may have plans to sell the property once the project is finalized. In this situation, a balloon program from Commercial Lending Corporation would be an ideal form of financing, as it gives you the time you need to complete your project and sell the property. In the event you are unable to find a suitable buyer and are approaching the end of your loan period, you are always able to roll your final balloon payment into a new loan.
Tagged: Commercial Lending Corporation