A commercial mortgage can be defined as a loan that is secured on a property that is not your residence. Basically, you get a loan to buy a commercial property that you want to rent. All the premises can be very different and this means that the loans must be evaluated individually and their price in relation to the individual risks that they entail.
Commercial mortgages take from where commercial loans end. There are so many lenders willing to offer mortgages, but you should also be careful with the process to get the best offer.
One of the best ways to assure your mortgage is to use a good mortgage broker company to find the best deals. Remember that lenders will definitely take the property you are interested in buying as collateral and for that reason you need to have the best terms for the loan as possible. They will give you up to 70% of the purchase price and you must make a cash deposit for the reminder or offer an additional guarantee that could be another property in case you do not have the necessary cash. In the same way, you can also use stocks and insurance policies that you have as assets for the deposit.
When applying for commercial mortgages, it is important to remember that the rates are not predetermined, as is usually the case with personal loans. When applying for the loan, the loan manager carefully analyzes risk levels and compares them with a risk profile for approval or rejection. A rejection occurs if your loan falls outside the risk profile used.
You can borrow up to 70 to 75% for the property occupied by the owner, but for the investment, then the rental income it generates is what will determine the amount you can borrow, but most of the time it does not exceed 65 %. In the event that you are buying a business that includes things such as goodwill, then the amount you can borrow goes more down.
To cover work, even in cases where you reject an offer from a lender, agreement rates generally apply. A commitment fee is applied as part of the agreement fee and is not refundable. The agreement fees can be up to 2% of the amount. When applying for the loan, you must also pay valuation fees because an appraiser is needed to visit and value the property and present the report to the lender. Residential valuations are cheaper compared to commercial valuations but do not have a fixed amount. There is also a legal fee and, in most cases, you must pay for your representation and that of the lender.
Getting a Commercial Mortgage can be a tedious process, but a specialized commercial broker can help make it easier. This is said that a broker has the market knowledge and contacts since he is in a better position to find the best deals. He will represent you before the lenders and close deals on your behalf at a reasonable price.