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When is a Fixed and Fully-Amortizing Commercial Mortgage Right for My Borrower?

A commercial mortgage broker’s primary job is to find financing that best fits the needs of their client. It’s important for brokers to be able to evaluate the needs of their borrowers and to determine the type of commercial mortgage that best suits those needs.

For some commercial borrowers, a short-term loan that balloons after a few years will be the best solution. Investors looking to fix and flip a property or a property owner in need of a bridge to sale are good examples of borrowers who may benefit from a shorter-term loan that needs to be paid off quickly.

For many borrowers, though, a fixed and fully-amortizing mortgage is the way to go.

Here are some benefits these borrowers can expect:

The rate won’t change.

It’s not unusual for short-terms loans to have an adjustable-rate. For some borrowers, the lower rate is worth the possibility that their rate will increase due to  beyond their control. However, borrowers looking for more consistency and control over their financial situation are better off paying a slightly higher fixed-rate.

The monthly payment will always be the same.

If your borrower chooses a mortgage with a fixed-rate and fully-amortizing terms, that means your borrower will have a periodic payment throughout the life of the loan. Their monthly payment will never change, and if payments are made according to the amortization schedule, the loan will be paid in full by the end of the term.

There’s no need to worry about refinancing quickly.

One of the biggest benefits of fixed and fully-amortizing commercial mortgages is that your borrower doesn’t need to pay it off quickly. This offers your borrowers security in a rising rate market, which makes these loans easier to sell.

Commercial mortgage brokers should always take the time to get to know their borrowers’ needs and provide options that will benefit their clients. While short-term loans are great for some borrowers, other small business owners will be more interested in the consistency and security that fixed and fully-amortizing mortgages provide.

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