What happens when a commercial loan is called?

[Sue T.]

Hi,
I noticed that many commercial loans have a 5 or 10 year call; what happens when the loan is called? Do you just renegotiate a new rate for the loan with the current bank or do you have to go through entire process of appraisal, etc to get a new loan? What are the chances that the current bank will decide not to "continue" the loan?
Given the refinance risk, would it be better or less risky to go with fully amortized, but adjustable rate mortgage (with rate cap) rather than a fixed rate mortgage with a call?

Thanks.

[Joel Owens]

No way to give a blanket answer for that. Options available will depend on the loan itself and if it's a small bank,regional,national,overseas or a hedge fund or a private investor etc.

Typically on loans you go over options with the underwriter upfront going in so you have a plan when the time comes.