commercial mortgage lenders: Understanding the Basics of Commercial Mortgage Lending

2007-06-20 15:49:53

( Business )



One of the things associated with business or company expansion is purchasing a building to house the new office. If you have no means of financing your move, finding commercial mortgage lenders can facilitate the process of small business lending.

The principle applied to commercial mortgage lending is much the same with that of residential, except that the collateral is a business establishment.
In a business mortgage, commercial lenders only have the power to claim the collateral in case you default in payment but they can no longer collect your unpaid balance. On rare occasions, however, you would have to settle the entire loan if your foreclosed property is insufficient to compensate for the remaining balance.

How Commercial Mortgage Works

In general, a commercial mortgage is applied for by corporations or partnerships rather than individuals so the determination of credit standing is much harder compared with homeowner’s mortgage. This kind of mortgage frees you from the hassle of incurring any liability with commercial mortgage lenders should they fail to fulfill the terms and conditions of the mortgage. As soon as you default in your payment, commercial real estate lenders have the right to repossess your establishment.

Moreover, commercial mortgage lenders does not take into consideration your credit standing but on the building itself. In most cases, you should belong to a corporation since one of the clauses in a commercial mortgage is foreclosure of the establishment when the borrower declares bankruptcy. This is in contrast to the difficulty you encounter when selling your estate when the bankruptcy motion is still in court.

Commercial Mortgage Considerations

Commercial lending rates are considerably higher than residential mortgage loans. In this kind of loan, you can expect to pay a constant amount as long as the loan is in effect because this is a kind of fixed-rate mortgage.

The process in commercial lending is quite strict but with the help of seasoned and well-rounded commercial mortgage lenders will help you breeze through the challenging task of applying for commercial mortgage.

Finding the best commercial mortgage deal may require extensive research by the prospective borrower. There are various channels available at your disposal. You can take advantage of these avenues in order to secure the dream house you have longed for.


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