Commercial Mortgage Finance
Like mortgage finance offered to individuals, commercial mortgage finance is offered to commercial entities using real estate as collateral. For commercial mortgage, commercial buildings are considered as security instead of residential property.
In case of default in loan payment, the lender can seize to the commercial property to recover the loan amount.
As the name implies, commercial mortgage is offered to only to businesses and not to any individual. These businesses could be partnerships, incorporated businesses, limited companies etc.
These businesses should be sound financially and the process of verifying business income would be more complicated than for an individual looking for a personal mortgage. Because of this complication, sanctioning of a commercial mortgage loan might take as long as six to nine months.
Purpose of taking a commercial mortgage loan could be taken for a number purpose. These could be: to buy the building of an existing business, to make improvement or enlarge existing building, to make commercial and residential investment for development of real estate or to develop the property in any other way.
Besides purchasing already constructed business premises, like offices, shops, restaurants etc., and such finance could be used to buy other business assets like plant and machinery required to run the business.
Generally, commercial mortgage loans carry a higher interest rate than that offered for a personal mortgage loan. But, this rate would be lower than the interest rate offered for unsecured business loan. These mortgages are similar to fixed rate home mortgage in the sense that the interest remains constant throughout the loan period.
Generally, commercial mortgage loans are offered for a period ranging from three to ten years. But the loan period could be extended up to twenty five years.
As it happens in case of personal mortgage, the loan amount and the rate of interest would depend on the credit worthiness as assessed by the lender as far as the capacity to repay the loan is concerned.
In case, you have an excellent business record with verifiable profit and loss business statement, then it would not be very difficult for you to obtain commercial mortgage at a very attractive interest rate.
The best place to locate a suitable lender for getting commercial mortgage is the internet. A large number of commercial lenders are advertising on the internet for providing such a service.
Therefore, it would be possible to get a large number of quotations using the internet for comparison and for selection of the best offer.
