Choose the equity loan or line that best fits your needs
A refinance cash-out allows you to refinance your commercial mortgage for more than the outstanding amount of your original mortgage, and receive the difference between the two amounts in cash. A refinance cash-out is a good option if you’re able to refinance into a lower-interest loan, or if you have paid off your mortgage and want to cash out equity.
Using the equity in your commercial property or properties as collateral, you can secure a line of credit. A credit line is a type of revolving credit, which means interest rates will vary. You can pay down and reuse the credit up to the limit as long as the line remains open, similar to a credit card. An equity line of credit is best for short-term purchases, such as inventory or receivables.
A second mortgage cash-out, also known as an equity loan, helps you leverage the equity in your commercial property without refinancing your first mortgage. The money will be paid to you in a lump sum that you will then pay back over a fixed amount of time — typically between 10 and 20 years. The new mortgage will take a secondary position behind your primary mortgage.
Getting a second mortgage cash-out could be a good option if there’s a prepayment penalty associated with your first mortgage, or if interest rates have increased, and you don’t want to refinance your mortgage.