Board Topic: Refinance of Gas Station property
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Refinance of Gas Station property

Posted by: Alex Sep 7 2004, 03:00 PM
I bought Gas Station with property March 19, 2004. The property was appraised for $1,080,000.
I have two mortgages. One for $750,000 and another for $200,000.
$750,000 is for 25 years and $200,000 for 15 years.
Is there any way to combine these two loans together with lenght no less then 25 years payback period ?
What will be the cost of this loan ?

Posted by: loanuniverse Sep 7 2004, 04:16 PM

Well Alex, you are sitting on an 87.96% combined loan-to-value…… How did you pull that off for a gas station? Is the second the result of seller financing?

The problem here is that the combined ltv is high for a single purpose property is not going to be appetizing for a lender. There might be some non bank lenders out there that might entertain this, but a lot of what you would save from the point of view of a longer term amortization will be surrendered in the form of a higher interest rate on the combined outstanding {that is, if you are not currently getting killed with a high rate on the first loan}.

My experience is with commercial bank lenders, and I can tell you that what you desire would not be feasible with a bank lender. Of course, I am willing to be proven wrong but I need evidence that the borrower is not related or friends of an officer of the bank.

There is a possibility that a non-bank lender might be able to do this. I doubt it, but it is possible. My guess is that even with them, you would need to improve the ltv somehow.

Good luck.

Posted by: Alex Sep 8 2004, 11:30 AM

Thank you for reply to my question. two loans are :

1. $750,000 is with NJ Bank ( SBA loan ) - 6.5% interest for 25 years.

2. 200,000 is with the same bank and the same interest for 15 years.

SBA took my house, which worth about 600K-650K as a collateral, but I still have 380K mortgage on this house.
Another interesting thing, they told me my interest will be 6.5% for first 5 years and then will be adjusted with prime rate ( ussually prime plus 2,5-3.00% )

Tell me your opinion on these conditions please.
By the way, I think even now apraise for my property may be already more then 1.1 mil.

Thanks in advance.

Posted by: loanuniverse Sep 8 2004, 08:35 PM
I think that you got competitive financing. I also think that it would be difficult to improve upon it with an strategy of combining both mortgages into one.

But now, that I take a look at the terms…. Assuming that the big one is the first, and that there is no cross-collateralization or prepayment penalty, you could think of refinancing the first one. You might be able to shave some of that interest rate, and get the house released in the process.

At best, it will take you a couple of years to get the fees back, and the improvement to cash flow will be minimal.

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