Factors That Affect Commercial Mortgage Rates

2007-03-08 10:33:40

( Financial )



Commercial mortgage rates refer to the interest rates that are charged to commercial mortgage loans. Commercial mortgage rates are typically higher than residential mortgage rates because there are higher occurrences of default payments.

Commercial mortgage rates are determined by a number of elements:

Inflation is one of the major elements that affect commercial mortgage rates. As the economy improves the price for goods and services also increases. As a result, real estate prices, apartment rentals and commercial mortgage rates also go up. When inflation is so high however, interest rates are sometimes set at a lower rate, so that mortgage rates can be affordable.

The amount of time it will take for you to repay your mortgage loan is also one key factor that affects commercial mortgage interest rates. If you obtain a mortgage loan with a short loan period, you will receive lower commercial mortgage interest rates.

Commercial mortgage interest rates also increase as the amount of mortgage loan increases. This is especially true when your mortgage loan amount exceeds the typical maximum allowable limit set annually.

Your credit history also affects the commercial mortgage rates that will be offered to you. A poor credit history will cause the commercial interest rates to go up due to the past history of poor repayments.

Making a larger down payment at the start of a commercial mortgage loan scheme also helps lower commercial mortgage rates.

The type of commercial property that you obtain and its ability to generate income also affects the amount of commercial mortgage rates that are offered. If the lender sees that you are able to generate income from your business operations, or though property rental each month, the chances are higher for you to obtain commercial mortgage interest rates.

Generally speaking, you cannot directly influence the way commercial mortgage rates rise or fall. By taking note of the above advice, you can however influence the amount of commercial mortgage rates that is charged to you.


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