COMMERCIAL PROPERTY MORTGAGES

Are you looking to purchase commercial property? Commercial mortgage lenders can provide the funding for you. Banks and other lending institutions offer a variety of mortgages so that you can chose the one that best fits your business. It requires a considerable investment, a large amount of paperwork, and a strong business history. Before you can even apply for a loan, you have to find a property that you want to purchase. You will then have the building appraised and show that the building is environmentally safe. You will also need to show proof that you can make the payments on your commercial property mortgage.

Most lenders offer different types of commercial property mortgages. You can get a fixed rate mortgage or a variable rate mortgage. Fixed rate mortgages have an unchanged interest rate for their entire term. They allow you to lock in rates when they are low, but you have that rate throughout the term of the loan. You can refinance if there are benefits to you. Variable rate mortgages offer lower initial interest rates than fixed rate loans, but you are subject to fluctuating market conditions. Many businesses that provide commercial property mortgages start with fixed rates for three to five years, and then switch to variable rates for the remainder of the loan.

You can also investigate an interest only mortgage or a mortgage with a balloon payment. You still must pay the principal balance on this and any other type of commercial property loan. “Interest only” refers to making payments exclusively towards the interest for the first three to five years. Mortgages with balloon payments help you stretch your monthly dollar. This shorter-term loan requires small monthly principal and interest payments. These types of loans usually run from 5 to 15 years. They allow you to use immediate cash flow to grow your business. Your last payment, or balloon installment, includes the remaining interest and principal on the loan and can amount to tens of thousands of dollars or more. As you can see, balloon loans are a risky type of commercial property mortgages. Growth in your income may not come in time to meet the balloon payment. But you can roll the balloon into a new type of loan with better payment terms.

Commercial property mortgages help businesses get the necessary funding to purchase real estate. If you have good credit, strong financials and a proven business, you should be able to qualify for commercial property mortgages. Businesses rely on commercial property mortgages to buy land for new construction, to purchase an existing building or business, or to acquire multi-unit properties. Examples of commercial real estate include: office buildings, apartment complexes, strip malls, warehouses and manufacturing plants.

Commercial property mortgages offer several benefits over renting property. One of the most significant benefits is the fact that you own the property. Instead of just providing space for your business to operate, your monthly payments build equity. The interest on the commercial property mortgage is tax deductible which lowers you company’s gross taxable income.

Another advantage to commercial property mortgages is that the loan is assumable. This means that if you decide to sell the property while still carrying the mortgage, a qualified borrower could assume the loan without going through the entire loan processing scenario.