A commercial loan is a title given to express differentiation from loans not usually maintained by real estate or consumer loan departments. These types of loans may be secured or unsecured, and have long or short term maturities. A commercial mortgage can include working capital advances, term business loans, agricultural credits, and loans to individuals for business purposes.
Commercial loans differ from residential loans in that the collateral for the mortgage is a commercial building or other business real estate, not a residential property. When the buyer is taken into consideration for a commercial loan, the process is more involved than that of an application for a home mortgage. The credit history of the business and its owners are evaluated along with the aspects of the overall business record. The commercial mortgage rates are usually higher as well.
Commercial mortgage rates can be fixed or variable. The fixed rate mortgage is a mortgage type where the interest on the loan remains constant throughout the payment term. When commercial mortgage rates are variable, they have the ability to change with the economy. These commercial mortgage rates may also vary due to several different factors. These factors include the length of the loan, the location of the property, and the risk level of your business.
Lenders typically base commercial mortgage rates on the prime rate. The prime rate is the rate offered by the lender to larger corporations. When the borrower qualifies for high rates, this can put a burden on the overall success of repayment. Refinancing with a different lender at a later date will aid in acquiring lower commercial mortgage rates.
When acquiring a commercial mortgage, typically there is a large down payment of 25% - 35% of the purchase price. However, the payment then becomes equity in the property. Depositing less than 25% on the down payment will considerably increase the interest rate. To achieve the lowest possible commercial mortgage rates, the borrower should put the largest amount possible down.
Commercial mortgage rates, for any type of business loan, should always be negotiated with the lender. Since payment on the property is likely to continue over a period of several years or more, negotiating to receive the lowest possible rates will help the mortgage holder to meet their monthly payments. More affordable payments help the borrower pay the loan off at a more efficient rate, saving the borrower time and money. A mortgage broker can help negotiate the lowest possible interest rates.
No comments:
Post a Comment