Commercial Real Estate Loans > Commercial Financing and Coterminous Loans

Commercial Financing and Coterminous Loans

A Loan That is Coterminous Matures on the Same Date as the Senior Loan

Suppose you are making a $3 million mezzanine loan or second mortgage on an office tower. How long should the term of the junior loan run?

Many mezzanine lenders and second mortgage lenders schedule their loans to mature on the same date as the first mortgage. Then, when the first mortgage balloons, the commercial property owner can refinance both the first mortgage and the junior loan at the same time with a new, larger first mortgage.

When a junior loan matures on the same date as the senior loan, the junior loan is described as coterminous.

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