Refinancing replaces your existing commercial loan with a new one — to lower the rate, pull out equity, get ahead of a balloon, or change the terms. In NYC two local wrinkles can make or break the math: prepayment penalties on the loan you're leaving, and the mortgage recording tax on the loan you're taking.
Reasons to refinance
Lower your rate or payment; take cash out against appreciation for improvements or another deal; get ahead of a maturing balloon; or move from a floating rate to a fixed one for certainty. Each has a different break-even, so start with the number, not the impulse.
What lenders re-check
A refinance is underwritten like a new loan: the property's net operating income, LTV, DSCR, and debt yield against current rents and current rates, plus your credit, liquidity, and experience. A property that's grown its income refinances well; one that's softened may size smaller than you'd hoped — model it first with the refinance calculator.
Mind the prepayment penalty
Before you refinance, price the cost of exiting your current loan — a step-down, yield maintenance, or defeasance can erase the savings if you leave too early. Sometimes waiting until the penalty burns down is worth more than today's lower rate.
Ask for a CEMA
New York's mortgage recording tax (~2.80% on commercial loans of $500k+) applies to your new loan — but a Consolidation, Extension, and Modification Agreement (CEMA) can let the lenders assign the existing mortgage so you pay tax only on new money, not the whole balance. On a large refinance that can save five figures. Ask lenders whether they'll do a CEMA.
Time it right
Give yourself 60–90 days, and if you're refinancing to beat a balloon, start 6–12 months out. When you're ready to compare offers, get matched — free — to lenders covering your borough and property type.