Never Let Debt Age: How Lenders Benefit from Early Refinancing

Benefits of Early RefinancingThere is a reason cheese and wine are iconic in the way they respond to time. Loans fall into the expansive category of things best prevented from maturing.

Fast and Strong

Refinancing loans long before they mature is apparently the way to go, as properties in New York and Chicago, USA consistently demonstrate the benefits of ‘rapid refi’. It is becoming increasingly apparent that the smartest move for banks is to step in between borrower and lender, snatching up the opportunity for greater returns for all parties involved.

Among the properties Forbes listed as examples of ‘rapid refi’ success stories, the 10-storey office building in Evanston, a suburb in Chicago, demonstrates the value of acquiring properties that are not only often refinanced, but those that are often resold. Switching hands from MetLife to Wells Fargo and finally to Deutsche Bank, the Sheraton Grand had the funds to undergo a $25 million renovation for its 1,200 rooms and suites and outdoor riverfront lounge. Just this April, the city approved an additional $200,000 of additional maintenance work.

Free and Growing

For two years in a row, a 22-office tower on Broad St. in Manhattan has benefitted from early refinancing, with 30 jobs approved in just the first half of 2016. This translates to more than $2.3 million in estimated work, in addition to $1.25 million in estimated installation costs of interior non-bearing partitions and related finishes.

Professionals from note the open nature of such opportunities, since it was a smaller bank that secured the acquisition and construction loans from financial giant MetLife, and are now reaping the benefits of early refinancing.

The finance industry has proven the value of timing for countless instances now, yet new and not-at-all-surprising moves are still manifesting to the institutions willing to take risks. Early refinancing may be just another method of improving already favourable deals, but it is a practice many lenders should learn from, if not directly imitate.

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