Monday, August 8, 2011

A Few Points About Commercial Mortgage

By Peter Skonctue


Many business owners are beginning to discover that purchasing real estate for business purposes can be a lucrative experience. In order to purchase commercial premises, however, you must satisfy extensive criteria for qualification. Investing in commercial mortgage may be risky for some, yet for others, the loan fulfills many dreams.

A business property loan is used to either purchase land or property, expand on existing commercial buildings, or refinancing existing debt. The loans are generally offered by most banks or lending societies, yet you must satisfy extensive criteria for qualification. Unlike residential mortgages, commercial building loans use real estate as collateral. In addition, obtaining a real estate loan to purchase property for business is an elaborate process, which depends upon the business plan, business credit, and proof of a stable financial history.

When considering taking out a business property loan, it is important to identify payment options to finance the investment. Firstly, a business owner must choose a qualified estate agent that will serve as a reliable resource to help you through the process. The specified agent or broker handles the required documents, collaborates with a number of lenders, and finalizes the perfect deal that meets the needs of your business.

There are several types of business loans available for application. The business property estate financial option that you choose must depend on what you plan to do with the building, if you are purchasing the property in which the building occupies, or if you are purchasing the property for letting purposes. One type of commercial property mortgage is identified as owner occupier mortgage. This loan is specified for entrepreneurs that is purchasing the building for business operation. Specifically, the owner occupier financial solution is solely for business owners who will use the building to operate their own company. This type of loan requires a low down payment as they generally have a lower rate of default. However, it is also dependent upon the industry sector, the business performance, and personal track record.

Another type of nonresidential property loan is for entrepreneurs with the intent to become landlords. The buy to let real estate property loan is borrowed by entrepreneurs to purchase a building that will be rented or let out by other business owners. In most cases, buy to let loan interest rates are significantly lower and the loans can be arranged with no broker fees. The loan is designed to help you build wealth, yet has great potential for financial ruin.

As a business owner, you have the liberty to customize your loan and business needs. The first step is to choose the right property loan broker and creditor. It is extremely important that the borrower, broker, and lender collaborate to develop the best loan plan to accommodate the business needs. Because the brokers role is sealing the deal is significant, the business real estate mortgage broker must be experienced, analytical, and competitive. The lenders role is just as significant in that they should posses experienced professionals with creditable credentials. The professionals must be well defined in the market and fully aware of the policies and loan options.

Although lenders demonstrate limited flexibility with providing mortgage loans, they also implement substantial penalties for late payments and debt default. Borrowers should be prepared to pay high interest rates as well as total payoff (balloon payment).

Before choosing to purchase nonresidential property, be sure that financial resources are available. The creditors will seize the property if payments are not made. Secondly, choosing the best commercial mortgage broker to assist with obtaining the right loan to meet business specifications and make a sound investment for future success.




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