As the last of the pre-recession commercial mortgage notes begin to come due in 2017, it’s important for commercial brokers to reach out to those borrowers who might struggle to find the financing to pay them off. The volume of loans that have come due in 2016 and that will come due in 2017 is more than $130 billion overall and significantly outpaces previous years, according to The Real Deal Magazine.
Many of the commercial mortgage borrowers who received financing in 2006 and 2007 are now facing a 10-year balloon coming due, and a substantial number are unlikely to qualify for refinancing through traditional means.
As a commercial mortgage broker, it’s in your best interest to consider what you can do to help your borrowers when it comes to loan terms. Many commercial lenders offer what at first glance seems like a great deal, complete with a good rate and a quick turnaround time. However, there aren’t many small-balance commercial lenders who offer fully-amortizing loans, so your borrower is likely to face a ballooning mortgage and the prospect of refinancing again within a few years.
Borrowers currently dealing with the prospect of these notes coming due would benefit from a fixed-rate, long-term mortgage. While a nonconforming commercial lender’s rates may be higher than the banks, a small-balance commercial mortgage with a fully-amortizing term will allow your borrower to pay off their debt. At APEX, we offer borrowers fixed rates 15 to 25 year terms with no balloon. Your borrowers will not need to worry about re-qualifying or refinancing in several years; they’ll only need to make their monthly payments.