Cash-Out Refinance
A refinancing transaction where the new loan amount exceeds the existing debt, allowing the borrower to extract equity from the property. Cash-out is possible when property values have increased, debt has been paid down, or both. Most lenders allow cash-out refinancing within their standard leverage parameters.
Related Terms
Permanent Financing
Long-term debt (5-30 years) secured by stabilized commercial real estate, underwritten primarily on current cash flow. Permanent loans offer lower rates than transitional financing and are available from life companies, banks, agencies, and CMBS lenders. They are the typical "take-out" financing after construction or bridge loans.
LTV (Loan-to-Value Ratio)
The ratio of a loan amount to the appraised value of a property, expressed as a percentage. For example, a $7 million loan on a $10 million property has a 70% LTV. Lower LTVs represent less risk to lenders and typically result in better rates. Maximum LTVs vary by lender type: life companies (55-65%), CMBS (up to 75%), and agencies (up to 80% for multifamily).
Have Questions About CRE Financing?
Our experienced team can help you navigate the complexities of commercial real estate capital markets.
Contact Us