Commercial Financing and Interest-Only Conduit Loans

A prudently underwritten commercial mortgage loan normally has a 25 year amortization.  If the commercial property is older than 25 years old, it used to be quite customary for a commercial mortgage lender to insist on an amortization schedule of just 20 years.  This increased the monthly payments and usually resulted in a smaller loan.

Several years ago the big conduit lenders, however, in a desperate attempt to win more commercial loan business, started to offer commercial mortgage loans that were interest-only for the first year and then amortized over 25 years thereafter.  And they got away with it.  Although the rating agencies complained a little bit, these loans were allowed into the securitized pools.

Then some conduit lenders last year started to offer loans that were interest-only for TWO years and then amortized over 25 years thereafter. 

Now some conduit lenders are making commercial loans that are interest only for the first THREE or FOUR years!  It's arguably foolhardy, and some bond holders will eventually suffer for it, but these interest-only conduit loans are now becoming commonplace.

You can apply to scores of conduit lenders through C-Loans.