Rollover mortgage allows refinancing of loan balance at the current rate.
Rollover mortgage is best defined as a short-term loan in which the unpaid balance is refinanced every few years at the most recent rate. This can be great for a borrower if the interest rates fall in the next few years. It can be a great risk to take if you expect interest to drop. Instead of being locked into a 15 or 30-year loan with the same interest you will be refinanced. If you aren’t careful a rollover mortgage can really hurt you if the interest jumps up too high and your monthly payments increase.
Be cautious if you pursue a rollover mortgage for your next commercial real estate transaction. If you have a good indication that interest will go down in a few years this is a good option, but if you are unsure it may be best to sign up for a longer-term fixed mortgage. The lowered interest can benefit your business by improving the amount of money you pay each month.
