Commercial Loans – Cost Effective Way

Example 1. Owner occupied office Commercial Loans in Australia.

Borrower is 3 years into a 5 year fixed, 20 year amortized loan and is considering refinancing into a 30 year fixed, 30 year amortization commercial loan. The borrowers primary motivation is a desire to increase cash flow to help businesses overall profitability. In addition the borrower has concerns over future rate increases when the existing loan balloons

Existing Loan – 5 year fixed 20 year amortization.

Property Value $1,500,000

Current Loan Balance $1,075,000

Original Loan Balance $1,125,000 (Purchased building with 25% down)

Current Loan to Value 72%

Current Equity 28% or $420,000

Interest Rate 7.25%

Monthly Payment $10,418

Proposed Loan – 30 year fixed, 30 year amortization. Borrower is planning on rolling as much of the closing costs as possible into the loan amount to reduce “out of pocket” cash.

Property Value $1,500,000

Current Loan Balance $1,075,000

Closing Costs $19,638

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