Hi BP community,

I have received the below offer from a lender for multi-family commercial loan. 


only offering a fixed interest rate for the initial five years of the loan and the best rate I can probably get is going to be in the 5.00-5.125% range for the initial five years. At the end of the initial five years there are a number of options available to you.

1. Rate converts to a variable rate of prime + .50% for the remaining term

2. Rate converts to the five year TCM rate + 3.00%, adjusting every five years.

3. Reprice the loan at whatever fixed rates are in five years. We can do this with an interest rate/maturity date amendment without having to refinance the loan.


I understand the 1st option. However, I don't fully understand the 2nd and 3rd option. Also, I am not sure what will be the best option for a long term buy and hold with a loan term of 20-25 years. Any help/recommendation is greatly appreciated. Thanks!!!