Is Converting a Mortgage to a Business Loan Reliable?
If you see people in the group chat discussing how mortgage loans can be converted into business loans to pocket the interest rate spread (mortgage rates used to be 5.8%, while business loans were 3.8%—a 2-point spread), keep in mind that only properties with a sufficiently large total value can generate significant savings (tens of thousands of dollars in interest).
Risk disclosure: Read original article
The risks mainly fall into two categories:
On one hand, business loans have short repayment cycles and must be refinanced every few years. This requires bridging capital, and intermediary fees for services like fabricated corporate cash flow statements and fake contracts can add up. You might get squeezed by unscrupulous agents, or even if everything goes smoothly, the actual savings could be minimal—the interest rate spread simply shifts from the bank’s profit to the intermediary’s.
On the other hand, there are legal risks: if caught, you could theoretically face imprisonment.
Intermediary handling fees typically run close to 1% of the loan amount. Real savings may end up being less than 1.5%, while the risk remains substantial. Weigh it carefully for yourself.