CMBS loans are loans that are backed by commercial mortgages. This means that the lender has a guarantee that they will be able to recover some of their money if the borrower defaults on the loan. This type of financing is ideal for commercial properties, such as offices, malls, and hotels.
A Few CMBS Loan Restrictions
There are some restrictions on what types of properties can be financed with CMBS loans, however. For example, the property must be income-producing, and it must be located in the United States. Additionally, the loan cannot be used to finance a residential property. CMBS financing is a great option for those looking to finance commercial property. However, it is important to make sure that the property meets the eligibility requirements before applying for a loan.
CMBS Financing for Eligible Properties
CMBS financing is available for a variety of property types, including office, industrial, retail, and hotel. In order to be eligible for CMBS financing, the property must meet certain criteria, such as being income-producing and having a credit rating of BBB- or higher. Loans that fall outside of these criteria may still be eligible for financing through other channels, such as government-sponsored enterprises (GSEs).
CMBS loans are typically used for properties that are considered to be higher risk, such as those with lower credit ratings or higher debt-to-income ratios. The loans are typically structured as Balloon Mortgages, which means that they have a fixed interest rate for a period of 5 to 7 years, after which the interest rate will adjust annually. This type of loan is ideal for borrowers who expect their income to increase over time, as it will allow them to refinance at a lower interest rate when the loan resets.
Borrowers should be aware that CMBS loans are non-recourse, which means that the lender cannot go after the borrower personally if the loan defaults. However, the borrower is still responsible for the property and will be required to sell it in order to repay the loan.
Seek Expert Assistance
If you are considering CMBS financing for your investment property, it is important to work with an experienced lender who can help you navigate the process and find the best loan option for your needs. Point High Finance is just such a lender, and we await your call or email via web form.