Looking for ways to expand your business? There are several commercial mortgage options that you can choose from. This type of mortgage will give business finance that can be used for moving, expanding or improving your company premises. With the loan amount, you can plan business development in an affordable way. Just remember, if you don’t keep up repayments on your mortgage, your property may be repossessed.
This type of loan is secured by commercial property such as, office building, shopping center or an apartment complex. Typically, the proceeds from this mortgage are used for acquiring, redeveloping or refinancing commercial property.
If you are applying, you will have to ensure that your trading history is good. Lending institutions are very particular about the trading history of the borrower. They wish to know if the borrower can afford the mortgage and even repay it.
How much money you will get as loan will be determined on the basis of loan to value (LTV) and the debit service coverage ratios. You can choose fixed rate or floating rate of interest for this type of loan. Underwriting factors as well as market interest rates affect the rate of interest generally quoted on a certain commercial real estate. Compared to residential mortgages, commercial mortgage interest rates are higher.
Generally, this type of loan can be taken for a term of five to ten years for stabilized commercial properties that have an established cash flow. Whereas, for properties in transition such as, newly opened properties or a property undergoing renovation, the term of this type of loan is between one and three years.
Be it a home loan or commercial loan, find out all details such as, documentation requirements or factors like home loan balance transfer and fees before choosing a lender.
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