Wondering how to get the most out of your commercial real estate? Read on to find out how your business can benefit from commercial mortgagesThe Mortgage Centre
Wondering how to get the most out of your commercial real estate? Read on to find out how your business can benefit from commercial mortgages
A commercial mortgage is a loan taken out on real estate owned by an individual or a company using it to operate its business. The sum received from this type of mortgage is usually invested in business expansion.
What does it take to get a commercial mortgage?
The qualification criteria for a commercial mortgage is not very different. The down payment is where you can really feel a difference. Check out the list below:
- Debt service coverage ratio
- Credit history
- The situation of your business
- Business type
- Down payment
Commercial mortgage lenders may sometimes require you to pay a certain sum which balances what they pay. This method is followed, simply to avoid a major loss for both ends. The debt to service ratio helps the lender determine the amount of cash available at your end and fix the loan rate.
Credit history is a very important factor when it comes to commercial mortgages. With them already being a risk, lenders are very careful when giving a loan amount to borrowers. Unlike home buyer mortgages, commercial mortgage lenders look into the type of business you are running. The situation of your business will play a very crucial role in the approval process of your business loan.
Some lenders may not agree with the type of business you run. In such scenarios, a broker who has experience can help you get it approved and at a good rate. However, in another case, if the lender believes in your business pitch, you could easily get a good rate. Hiring a broker could help you tailor your pitch for the lender’s expectations with ease.
Another criterion required by commercial mortgage lenders is a good amount of down payment. This amount will definitely be higher than what you’d expect to pay for a first time home buyer mortgage. But it can help you reduce the burden in the future as well as access better interest rates.