Hi,
It is critical that you pay it down. If you building is of any age, then the mortgage serves as a capital well for capital repairs and improvements. As we have seen, building values do not always rise. And the building components will wear out - even recently replaced ones. If you don’t pay down the mortgage, then you risk not having enough surplus value from which to borrow should you need to in a downturn in the economy. And don’t forget inflation and new regulations – capital repairs will nearly always cost more in the future then now.

Even more challenging is the need to raise reserves while paying down the mortgage. New regulations by Freddie and Fannie mean that they may not guarantee unit mortgages to prospective buyers if you fail to place 10% of your maintenance into reserves.

I would go for the low rate loan. Use some of the savings on the interest rate to increase reserves. You might even save up enough to pay off a portion of the remaining balance after the 10 year period is up.

Good luck!
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