Commercial mortgage – Financing for Business Properties

2007-03-08 10:33:40

( Financial )



A commercial mortgage is a loan offered to businesses generally for purchasing commercial properties or land for business purposes. Business owners can use a commercial mortgage to secure financing for a new office, or to put up other business establishments such as restaurants, stores, clubs, and other places of business.

A commercial mortgage is a secured loan that uses commercial property as loan collateral. The borrower pledges the purchased commercial property to the mortgage lender. This gives the lender a legal claim over the property until full repayment of the loan. In case of non-payment, the lender can foreclose and sell the property to regain the loan amount.

To determine the amount of the loan and the interest rate to be charged, the mortgage loan company will assess your credit worthiness. They will evaluate if you have the financial capacity to repay the loan. Usually, the mortgage company will require you to present your audited financial statements within the last three years such as balance sheets, profit and loss account, and a cash flow forecast. If the mortgage company sees that your business record is satisfactory, there is a good chance you will qualify for a commercial mortgage.

Having other existing favorable business assets that you can use as additional collateral can also help you secure more competitive commercial mortgage interest rates. A commercial mortgage has two types of interest schemes that you can choose from, a variable interest rate and a fixed interest rate that is set and will not change for the entire duration of the loan.

The advantages of a commercial mortgage loan are access to capital, lower interest rates, and longer repayment terms anywhere from 1 year up to 25 years. You can also arrange a repayment plan based on your needs. Generally, commercial mortgages have more flexible options than unsecured business loans, making them an excellent option for financing business properties.


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