Reasons to use an interest only commercial loan for real estate investment

Interest only commercial loans can offer you the benefit of lower monthly payments and increased flexibility.

An interest only loan is what its name implies, you only make interest payments on your loan rather than paying down its principle. Because you are solely making interest payments, the monthly fee on this type of loan is usually far less than a regular mortgage. However, interest-only loans entail some risks for specific types of borrowers.

Interest only mortgages carry risks, especially for long-term borrowers. Most borrowers should not use an interest-only loan in place of a regular mortgage. Like any other loan, interest-only loans have to be paid off in the end. You’ll usually owe the same amount ten years down the road as when you began making payments. In the end, you’ll either need to refinance or sell your property to pay the loan off in full. There is the added risk that your property declined in value over the term of your mortgage and when you sell your home, you will have to pay back any remaining principle. In the worst case scenario, you will not be able to refinance and will have to pay back the remaining principle in a single payment.

However, an interest-only loan might be an ideal financing strategy if you plan to sell the property quickly

You should consider using an interest only commercial loan to invest in commercial real estate

Because interest only loans involve lower monthly payments borrowers can usually qualify for larger loans. Lower payments improve your ability to service your debt on a monthly basis and increase your debt to income ratio. With a better debt to income ratio, you can qualify for a more substantial loan. When it comes to real estate investment, the bigger the loan the less money you will need to pay out of pocket.

Lower monthly payments on interest-only loans allow also allow you to spend more money upgrading your property. Some interest only loans also allow you to make additional payments towards the loans outstanding principle. If this is the case you can pay down an interest-only loan in the same way as a traditional mortgage.

Interest only give you the benefit of a larger loan, lower monthly payments and in some cases the flexibility to pay down the mortgage at your convenience.

Level 4 Funding offers interest only commercial loans which could be an ideal solution for your next investment project

Level 4 Funding provides short-term interest only loans which can help you begin investing in real estate. Level 4 can offer loans for up 85 percent of the purchase price for your next investment property. Similar lenders typically provide loans of up to 75 percent. With Level 4 Funding you will need to spend less money up front. Above all the terms of these loans are flexible. Level Four’s loans have a minimum term of less than a month and a max term of 24 months. A shorter loan term allows you to avoid the long-term risks associated with interest-only loans.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
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About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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