second mortgages
Commercial second mortgages are commonly paired with a new initial commercial mortgage loan. Typically spanning one to five years, the second mortgage involves interest-only payments. While pivotal in specific financing situations, careful consideration is essential to assess your capacity to service both loans concurrently.
This creative financing approach offers distinct advantages, notably in scenarios where a commercial second mortgage diminishes the Loan-to-Value (LTV) of the primary mortgage, facilitating easier qualification. For instance, if the primary lender sanctions a 70% LTV but your down payment is only 20% or less, a commercial second mortgage can bridge the gap.
Various options, such as interest-only payments, annual payments, exit fees, etc., provide flexibility to manage immediate costs and defer expenses associated with the commercial second mortgage. The underlying strategy is to afford the property time to appreciate, allowing for future refinancing and consolidation of both mortgages at a later date, potentially at a reduced LTV.
Key Benefits of a Second Mortgage:
- New Renovation or Construction Projects: Second mortgages are instrumental in funding new renovation or construction ventures, enabling you to enhance or expand your commercial property.
- Business Expansions, Mergers, or Acquisitions: These mortgages support your business's growth by providing additional capital for expansions, mergers, or acquisitions.
- Working Capital For Your Business: Commercial second mortgages serve as a source of working capital, offering financial flexibility to meet your business's immediate needs.
- Debt Consolidation: They are utilized for consolidating debts, streamlining multiple financial obligations into a single, more manageable payment.
- Short Term Bridge Financing: Second mortgages can address short-term financial gaps, providing crucial bridge financing when immediate capital infusion is necessary.
