In commercial real estate, an assumable loan is a loan that can be taken over by a buyer when the owner of the property sells. Determining whether or not a loan is assumable (and under what conditions it can be assumed by a new buyer) can be very important. Otherwise, an owner/investor could face significant prepayment penalties if they need to pay off the loan in order to sell the property.

In most cases, if a loan is assumable, the new borrower/owner will still have to be approved by the lender. The lender needs to ensure the borrower has the financial means to repay the loan, and that they aren't going to be a serious financial risk. For some kinds of loans, such as HUD multifamily loans, having a new buyer assume a loan requires a small fee of between 0.05% and 1% of the original loan amount. In many situations, CMBS loans are also assumable for a small fee.

The main benefit of an assumable loan in commercial real estate is that it allows the seller to avoid prepayment penalties. This can be especially beneficial if the loan has a high interest rate or if the seller needs to sell the property quickly. Additionally, assumable loans can be beneficial for buyers, as they can take over the loan at the same interest rate as the original borrower, potentially saving them money in the long run.

For some kinds of loans, such as HUD multifamily loans and CMBS loans, having a new buyer assume a loan requires a small fee of between 0.05% and 1% of the original loan amount.

The main risk associated with assumable loans in commercial real estate is that the new borrower/owner may not be approved by the lender. The lender needs to ensure the borrower has the financial means to repay the loan, and that they aren't going to be a serious financial risk. Additionally, for some kinds of loans, such as HUD multifamily loans, having a new buyer assume a loan requires a small fee of between 0.05% and 1% of the original loan amount. In many situations, CMBS loans are also assumable for a small fee.

Source: www.commercialrealestate.loans/commercial-real-estate-glossary/assumable-loan

In most cases, if a loan is assumable, the new borrower/owner will still have to be approved by the lender. The lender needs to ensure the borrower has the financial means to repay the loan, and that they aren't going to be a serious financial risk. For some kinds of loans, such as HUD multifamily loans, having a new buyer assume a loan requires a small fee of between 0.05% and 1% of the original loan amount. In many situations, CMBS loans are also assumable for a small fee.

Qualifying for a commercial real estate loan is a more rigorous process than applying for a residential loan. You’ll need:

• A detailed business plan
• The plans you have for the property
• 3-5 years of financial documents (business and personal)
• Your personal credit history

The main advantage of assumable loans in commercial real estate is that they can help an owner/investor avoid significant prepayment penalties when they need to sell the property. Additionally, assumable loans can help a new buyer/borrower get access to financing that they may not have been able to get on their own. For example, HUD multifamily loans and CMBS loans are assumable for a small fee, which can be beneficial for a new borrower who may not have the financial means to qualify for a loan on their own.