Locking in at a higher rate?!?

[Bob Langworthy]

This is such a simple question, but I'm interested in hearing from others who have been down this road before. Current mortgage on my commercial office building is at 4.125% fixed until August 2022, then variable at Prime +.375%. 25 year amortization. Outstanding balance of $245,000 with current value of ~$350,000. 

Three options:

1) Stay with the same bank. They will give me 5% fixed until August 2025, then variable at Prime + .125%. No fees, no appraisal. 25 year amortization. But I don't really like the bank and I get no business from them.

2) Move to a local bank with a loan officer who is referring business to me. 10 year fixed with 10 year term 5.25%. No fees or appraisal.

3) Same local bank as 2) but 10 year fixed 20 year term at 5.375%.

The property can handle the higher mortgage payment, although I'd prefer the longer term. I'm leaning towards option 3, but my brain doesn't like the idea of locking in at 1.25% higher than my current rate. I'm considering it, however, because I see inflation coming and rising interest rates along with it. And the client referrals to my accounting practice are a nice bonus.

Thoughts?