Commercial Mortgage Loans

Business houses have their finance in rotation and sell their products at credit. Except their reserve fund which is used for emergency purpose, they do not encourage keeping surplus money in liquid conditions. To get tax returns, these companies go for commercial mortgage of their own commercial buildings or land they possess. Commercial mortgage is a loan generated by keeping real estate i.e. fixed assets as collateral towards security for repayment. The borrower is a group of partners, or limited company or incorporated business. The assessment of repaying capacity or the value of the real estate, of the commercial establishment is more cumbersome and complicated than mortgage of residential property.

In case of default by the borrower, i.e. non repayment of the interest and principal in stipulated time, the commercial mortgage loan lender can only seize the collateral security but cannot claim for any further dues. Commercial Mortgage loans are given to the borrower against easy monthly installments of small payments over a long period of 20 to 25 years. The commercial mortgage loan borrower is required to make a balloon payment of total remaining amount after a smaller time period.

Your next question is the purpose for a commercial mortgage loan. Isn’t it? The purpose for which a business house applies for commercial mortgage loan is to buy more lands, commercial premises, expansion of the building or refinancing existing debt. Lands are bought for constructing new business complexes, new buildings are purchased for expansion purpose, or on diversification point of view.
On what basis does the Commercial mortgage loan lender judge before taking as collateral security? Commercial Mortgage loans are structured to be underwritten based only on the value of the collateral security and the income the property produces and not on the credit worthiness of the borrower.

The commercial mortgage loan lender insists on the property to be owned by a single entity like corporation to enable the lender to seize and sell the property in case of default even if the borrower goes into bankruptcy. Even if bankruptcy court case is subjudice, the commercial mortgage loan lender can go ahead with seizure of the collateral security or resale of the same.

Commercial loan lender calculates the Loan to Value percentage. Normally, the lender gives 55% to 70% loan on the value of the collateral security unlike in residential mortgage where the % is higher.
Commercial mortgages carry higher rate interests than residential mortgages. Common form is that the rate of interest is constant for the full term. A second commercial mortgage loan is generated on the first collateral security and has a higher rate of interest to cover higher risk in case of default.
If you are a businessman in need of commercial mortgage loan and you are in a position to keep your commercial building as collateral security, please contact my phone number or visit our website which will elaborate our conditions of application. We are here to give you commercial mortgage loan at lower rate of interest and longer periods of time.