Be careful about conduit loans
If your mortgage broker extols the virtues of a “conduit loan,” i.e., lower rates, longer amortization, and so forth, be wary. I’m not telling you to avoid conduit loans, but if you’re accustomed to dealing with banks, say farewell to a customer service-oriented experience. Also beware of
-Lengthy prepayment lockouts
-Arduous reporting requirements
-Prepayment penalties (called defeasance) that make prepayment unfeasible
If you want to sell your building in the next year or two, I would discourage you from using this sort of debt.
Tags: Commercial Real Estate, debt, mortage