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5 Reasons Why You Should Offer Fixed and Fully Amortizing Commercial Mortgages in Today’s Rising Rate Environment

Commercial Mortgage
Posted on 
October 1, 2023

With today’s interest rates continuing to rise, it’s imperative that brokers advise their clients about the benefits of fixed and fully amortizing commercial mortgages. We all understand the fundamental obligation to give borrowers all the information they need to choose the mortgage that best fits their needs – and part of that is making sure they understand all the security and stability a fixed-rate mortgage provides.

Here are five reasons why it’s imperative to offer fixed and fully amortizing commercial mortgages to small business borrowers, particularly in a rising rate environment.

  1. The Financial Perils of the Rising Rate Environment

    In recent years, there’s been a gradual upward trend in interest rates. While various economic factors contributed to this trend, it presents a significant challenge for borrowers seeking commercial mortgages. The unpredictability of variable-rate loans can make financial planning and budgeting a daunting task. In such an environment, fixed and fully amortizing commercial mortgages are the simple and undeniable choice.
  1. Stability and Predictability

    One of the primary advantages of fixed-rate loans is the stability they provide. By locking in a constant rate for the life of the loan, borrowers can accurately forecast their monthly payments and plan their budgets accordingly. This stability becomes even more essential as interest rates continue to climb, increasing the risk of higher monthly payments for variable-rate loans.

    Moreover, fully amortizing loans offer borrowers the comfort of knowing that their payments are structured to pay off the principal and interest gradually over the loan term. This structure ensures that borrowers steadily build equity in their commercial property, strengthening their financial position in the long run.
  1. Protection Against Rate Volatility

    Another significant advantage of fixed-rate commercial mortgages is their ability to shield borrowers from extreme rate fluctuation. In a rising rate environment, the potential for dramatic rate increases can cause severe financial strain for borrowers with variable-rate loans. With fixed-rate mortgages, commercial borrowers eliminate the risk of facing sudden and significant payment adjustments, allowing them to focus on their business operations with peace of mind.
  1. Long-Term Financial Planning

    Fixed and fully amortizing commercial mortgages allow borrowers to engage in long-term financial planning. The certainty provided by a fixed rate enables business owners to align their financial strategies with a clear understanding of their long-term debt. This predictability allows them to make informed decisions about investments, expansions, and other financial commitments, without worrying about unexpected interest rate changes affecting their cash flow.
  1. Improved Borrower Qualification

    Fixed and fully amortizing mortgages are beneficial for the broker as well as the borrower. By offering fixed and fully amortizing commercial mortgages, brokers can expand their client base and improve borrower qualification. Some borrowers may need help qualifying for a variable-rate loan due to the uncertainty of future interest rates. By offering fixed-rate options, brokers provide a more accessible financing solution for these borrowers, increasing their chances of securing a loan and helping to drive business growth for both parties.

In today’s rising rate environment, brokers play a crucial role in guiding borrowers toward suitable mortgage options. Fixed and fully amortizing commercial mortgages offer stability, predictability, and protection against rate volatility, making them an excellent choice for many borrowers. By educating clients about the benefits of these loan types, brokers can build trust, expand their client base, and help borrowers achieve their long-term financial goals.

At Apex Commercial Capital, we pride ourselves on working closely with our broker partners to fully inform clients of the options available and help them select the commercial mortgage that works best for their business. We offer a wide range of fixed and fully amortizing commercial mortgages, along with the service and support brokers need to give borrowers the financial confidence and stability they need to navigate an increasingly uncertain market.

Apex Commercial Capital is a full-service lender focused on providing commercial mortgages and equipment financing to small businesses. We understand that the borrower is more than a credit score – we consider all the relevant financial information when reviewing a loan request, looking beyond the numbers to understand each business owner's objectives in determining how we can best work together to achieve them. Call (800) 262-APEX today to talk with our team of small business mortgage specialists.


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