Commercial Mortgage No Prepayment Penalty Recommendations
I’m looking to get a commercial multi family property with 5+ units and would need a commercial loan. I’m new to commercial real estate and so looking for others experience regarding the loan. The one thing that’s caught my attention so far is prepayment penalties. 

Looking to see if anyone has been able to secure a commercial mortgage with no prepayment penalty or at least a fixed smaller penalty. If so do you mind sharing info of lender?   What types of loans should I be looking at if I think I’ll possibly refinance or pay extra into the loan?  Thanks in advance.
[{"id": "ggyln0n", "text": "You can float the rate and avoid a prepayment penalty with a bank loan. Fixed rate bank loans will usually carry a PPP for at least a few years. You can always try to negotiate it out or add a clause that waives the penalty in the event of sale or refi with a perm lender.", "replies": [{"id": "ggylvkg", "text": "Thanks for the response. I\u2019m kinda new at this but what does it mean to \u201cfloat the rate\u201d. My biggest concern is if I refinance or sell in one or two years don\u2019t want to pay a 3-5% prepayment penalty.", "replies": [{"id": "ggyo4or", "text": "\u201cFloat the rate\u201d means get a variable rate loan.", "replies": [], "depth": 3}, {"id": "ggyyb1e", "text": "Just look for a soft prepay if you might sell.  But why not take a prepay for a lower rate?  Are you planning on refinancing or selling in that time?  Probably not.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ggz42tp", "text": "I work for a commercial bank and we use the verbiage in our prepayment penalties \"unless repaid by internally generated funds\".  So we do not assess the PPP in the event that the client pays off the loan with cash or from the sale of the property.  We only assess it when they refinance with another lender.  \n\nAll lending institutions are going to have a PPP built in though unless you can somehow negotiate it out but by doing so you are going to have to give up on some other areas like reporting requirements, interest rate, fees, etc.  Because we portfolio all of our commercial loans internally we need to be able to accurately forecast future income associated with our commercial loans; we also have to account for certain things such as interest rate risk, etc. hence the prepayment penalties.", "replies": [], "depth": 1}, {"id": "ggzd565", "text": "Credit unions have no prepayment penalties in most cases", "replies": [{"id": "ggzqhj1", "text": "And lower closing costs, generally", "replies": [], "depth": 2}, {"id": "gh0lje9", "text": "Residential RE Investor here. Never been involved w commercial. How common is it to get CU to make commercial loans? Thank you!", "replies": [{"id": "gh14lol", "text": "Hard question to answer. I\u2019m a commercial mortgage broker. I\u2019d say we do 10% of our deals with credit unions? The no prepay is great. But the process is typically torture.", "replies": [{"id": "gh1tbjf", "text": "I appreciate you sharing this, good info, thank you.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "gh38jvv", "text": "Do you have to already bank with them to get good pricing or can I just walk in as a first time customer?  I\u2019ve never set foot inside a credit union before.", "replies": [{"id": "gh742bk", "text": "That answer varies depending upon which credit union.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gh10ync", "text": "What's the profile of the property and what's your plan? Sounds like you might want something shorter term for flexibility like a bridge or private hard money loan. You'll pay for a zero or short term prepay with a higher rate. I'm seeing sub $1m MF loans, zero prepay at 10-12% rates. 24 mo. loans. Full recourse.\n\nThat said, we are using floating agency debt, with its 1 yr lockout / 1 yr prepay as a sort of bridge loan (for stabilized value-add deals) considering COVID reserves are slowing down renovation and rent increases.", "replies": [], "depth": 1}, {"id": "gh1233u", "text": "Fixed rate loans have prepayment penalties, as do loans with a SWAP contract. Floating rate loans do not.", "replies": [], "depth": 1}, {"id": "gin6htn", "text": "With only 5 units and doing this on your own vs hiring a competent mortgage broker - prepayment is the least of your worries.", "replies": [], "depth": 1}]