Commercial Mortgages

Commercial mortgages are similar to your home mortgage, with the exception that they are obtained on commercial properties. What is a commercial property? In most cases, it will be property for business purposes, such as for shopping centers, industrial buildings, office buildings, golf courses, resorts, hotels, parking garages, car washes. You may also need a commercial mortgage as a follow up to a construction loan, if the loan was to build a commercial property.

As you might expect, you can get an adjustable commercial mortgage, or a fixed rate commercial mortgage. These mortgages have many of the same features as the ARM or the fixed rate mortgage on your home. Again, the same principles apply to commercial mortgages as residential mortgages, but collateral is business property. The length of the loan can range from 5 - 30 years, and payments are normally due monthly.

The good news? Interest rates are typically lower than for residential property!

How do I get a commercial mortgage? Well, you really go through the same process as you would to get any other type of mortgage. In fact, you can easily search the Internet for suitable commercial mortgage lenders. This will allow you to comfortably compare quotes and options on a commercial mortgage.

The bad news? Most lenders are a bit fussier about lending commercial money. They'll want more details about the venture, including whether the building is fully occupied or not, what kind of business you are engaging in, and any other kinds of information (up to and including business plans and business records, if applicable) which will prove the viability of your business venture.

Don't despair. Just like there are for home mortgages, you'll have more than one type of lender. There are lots of "A" paper lenders, "B" paper lenders and easy "C" paper lenders. This means that if one lender turns you down, there may be another lender who is willing to take a bit more risk on you. As always, if you increase the risk to the lender, you can expect to pay more interest as a result. So, always comparison-shop. Even if you only qualify for a "C" lender, you may be able to get a better interest rate from one C lender versus another.

If you are having problems finding a suitable lender, consider a mortgage broker. A broker can work with you to ensure you have the right information for a lender, and then go out and find a lender for you. However, don't just take the first offer the broker brings you. It always pays to have done some research yourself so that you know that your broker is really bringing you the best deal, and not just getting the best commission for the broker.


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