Loan Assumptions, Commercial Loan Transfer to Buyer.

[Douglas Andrew]

Hi All- I have a question on Loan Assumptions for a commercial loan. I have a $2.45 million loan at 3% interest only. It was for 5 years with 3 years remaining. We are thinking about selling our building after 10 years of ownership. The commitment letter had the following language;

Transfers/Assumability: Subject to Lender’s then-current underwriting requirements and compliance with the other requirements of the loan documents, the Loan is assumable by a qualified transferee of the Property for a fee of 1.00000%of the unpaid principal balance of the Loan at the time of such a transfer (a “Consented Transfer”).

My question relates to the terms of the loan and savings to the buyer. If the bank approves, does that mean that the Buyer can assume our $2.45 million loan at the same rate?? OR does that rate change based on the "Lender's then current underwriting requirements?" I am assuming that the Buyer also avoids mortgage tax?? Are those the main savings to them, and the main cost here is the 1% fee on the 2.45 Million.

Thank you,

Doug