Dental Office Mortgage Questions

I am looking to refi/modify my current office mortgage. I have $441,000 left at 6.4% for 15 years. The same bank will modify the terms to 10 years at 5%, but they want a $5000 fee. I was wondering what types of rates others are currently being offered. Any help?

Can you clarify? Is this a mortgage against the real estate your practice operates from OR is this a practice loan you started or bought the practice with? Some people use the term “mortgage” pretty loosely.

The loan is for the office building only, it has gone up to 6.4% and was a construction loan turned mortgage. I am using a local bank and they offer only 5 years fixed after which it can go 2.75% above the Federal home loan bank of New York rate. Currently it has gone up to 6.4% which I thought was very high with interest rates so low. I called them and they offered to lower the rate to 5% and shorten the term to 10 years (my request) but they want a $5000 fee to do so. I feel the $5000 is excessive to just modify the loan but I was wondering what other banks were offering for commercial mortgage rates. The office building is assessed at $585,000 and we owe $440,000.

So they’re charging you a little over one point to modify the note. On one hand, you’ll be saving a ton of money which will more than offset the $5k; however, doesn’t hurt to ask them what’s behind the $5k. Why so high? What are their costs in modifying the note? The higher cost now MIGHT be in lieu of a pre-payment penalty OR to make up for some of the “loss” they’re taking on reducing their rate from 6.4.

This first appeared on Dentaltown.

Send your questions to Tim Lott, CPA, CVA at

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