The Call

Life is about making an impact, not making an income.

Service

Commercial Mortgage Loans

A commercial mortgage is basically a loan secured against commercial real estate, including an apartment building, shopping mall, industrial warehouse, or office complex. The funds from a commercial mortgage are usually used to buy, refinance, or renovate commercial real estate. Commercial mortgages are used for many different purposes, including the purchasing of commercial real estate, as well as making improvements to existing real estate. This article will briefly discuss the most common uses for commercial mortgages.
When shopping for commercial mortgages, potential borrowers must be aware of their interest rates and loan caps. The terms of a commercial mortgage can vary greatly depending on the lender. Interest rates for these loans are often tied to prime rates or short term interest rates. Generally, commercial mortgages can range from six months to 35 years (for leasers). In addition, some lenders may require the borrower to start making payments on the loan after a specified period of time.
Commercial mortgages are available for purchasing new buildings and remodeling existing ones. Many lenders make this possible through what are called “buy-sell” agreements. Buy-sell agreements allow business owners to use the property as collateral for a portion of the purchase price of the building and in exchange, the lender agrees to buy back the property at a later date, sometimes within a year of the closing of the deal. Buy-sell agreements have become quite popular with developers who are anxious to raise the capital necessary to buy and construct new buildings.
Another type of commercial mortgage is made for the purchase of residential properties. There are two types of residential mortgage – fixed-rate and flexible-rate. In a fixed-rate commercial mortgage, the payment amount is set at the time of purchasing the property. However, flexible-rate residential mortgages allow the payment amount to vary according to the financial health of the borrower. Lenders will require that borrowers confirm a credit score and submit to comprehensive credit checks in order to qualify for either one of these loans.
The terms of commercial mortgage loans are usually long, so it is necessary to carefully consider all aspects before signing the paperwork. It is recommended that you work with a loan consultant or mortgage broker to help you understand your options. The majority of lenders will provide free quotes from their commercial mortgage plans to help you shop around for the best deal. You should also contact several lenders to get a better understanding of their loan offers and to learn more about their terms of offer.
As with any loan, it is important that you carefully assess the risk of a commercial mortgage before signing on the dotted line. As mentioned earlier, you should work with a licensed mortgage broker to help you understand your options and find the most appropriate loan for your situation. By working with a mortgage broker and an experienced loan consultant, you can find the best option for your individual needs and financial situation.