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Commercial Mortgages - The Perfect Way To Buy, Build, Expand, Remodel And Refinance!


Are you looking to expand your business?  Have you realized the cost of renting is a rising concern each day?  If so, you might find that a commercial mortgage can offer business finance options you weren't aware of.  Here's everything you need to know.


What is a Commercial Mortgage?

Like residential mortgages, a commercial mortgage is a type of loan for buying land or property for business purposes.  With such mortgage types, the property buyer is usually a company or business as opposed to an individual and the business is either a partnership, limited company or incorporated.  In many cases, fixing a credit history is a tireless job with this type of mortgage.  Commercial mortgage rates are significantly higher than residential rates due to the many conditional risks on the anonymous side. 


How Can You Use a Commercial Mortgage?               

You can use a commercial mortgage for a commercial setup in the form of office space, a factory, a retail unit or restaurant space.  If you are unable to fit out an existing building that’s right for your needs, you can use your building loan to cover the construction costs of building a new space.  Overall, a commercial mortgage is all about:

  • Buying business premises.
  • Securing land development ventures.
  • Developing an owner-occupied business.
  • Adding to a buy-to-let portfolio.


What is the Expected Time to Secure a Commercial Mortgage?

To secure a commercial mortgage with the entire setup takes much longer, anywhere from 60 days up to a year.


Can You Use a Commercial Mortgage For a Re-Finance Project?

Yes, you can extend your payment terms and adjust your interest rate by refinancing with a commercial mortgage.


Key Features of a Commercial Mortgage

 A business mortgage plan differs from a regular mortgage in the following ways:

There are no fixed rates as a process of collateral in commercial mortgages.

There is a higher interest rate on commercial mortgages compared to residential mortgages with small and higher risk factors.

They tend to offer better interest rates than regular business loans.  In many cases, it is seen that borrowers are dealing with property as collateral when a refinance prospect is the center frame most of the time.


What are the Top Qualification Criteria for Commercial Mortgages?


  • Debt Service Coverage Ratio - this is the top measurement criteria that mortgage lenders will want and will help property buyers get through final preparation in a payment structure.  In most cases, lenders will apply a loan-to-value ratio to make sure that your invested amount is to help you with balancing the odds of proper measurement.


  • Credit History - in many critical cases, lenders will require a good personal credit score as evidence of your creditworthiness.  There are lenders that may accept applicants with an imperfect credit history, but that number is low.


  • Current Business Situation - if your business is fully-fledged and in working condition, commercial lenders expect your business to be profitable and steady.  They may even suggest using mortgage tools relating to it.  It is all to ensure your financial projections so you don't face any issue in buying a new home. 



The above information may help you answer what type of commercial mortgage loan situation can help you get your business going. If you are looking for more information on commercial mortgages online, connect with our official website!

Maria Delani Maria Delani 06/16/2020
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