Take-Out Loan

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DEFINITION of 'Take-Out Loan'

A type of long-term financing (usually) on a piece of real property. Long-term take-out loans replace interim financing, such as a short-term construction loan. They are usually mortgages with fixed payments that are amortizing.

BREAKING DOWN 'Take-Out Loan'

Take-out loans can be used for commercial real estate such as office buildings or other income-producing property. Zero-coupon mortgages are a new type of take-out loan. These loans require that interest and principal be paid in a single balloon payment at maturity.

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