What are commercial mortgages?
What we mean by commercial mortgages are loans received after giving commercial properties as collateral securities. These properties can be shopping centers, office building, apartment complex or industrial warehouses. The loan amount is generally utilized for acquiring, renovating or refinancing purposes.
Commercial mortgage services
Searching online, you will find professional service providers in commercial mortgages offering a range of services and products at affordable cost. The range of expert services includes
- Primary servicing – providing reporting services to investors, delinquency administration and arranging for traditional loans.
- Master servicing – This includes management and oversight of sub- services with multiple seller services in their portfolio.
- Special servicing – This includes asset management and workout of loan for loans that are non performing.
- Customized services in various portfolios –Third party asset management and servicing of loan which are non performing, mezzanine loans and preferential equity investments.
Commercial mortgage loans are provided to institutional investors, individuals, financial institutions, investment banks that are internationally recognized and third parties that are investment groups, those have loan portfolios and securities that are backed by commercial mortgage.
Benefits of a commercial mortgage
There are multiple benefits of commercial mortgages that include:
- You will have the advantage of owning your business completely and not parting away with a certain percentage while taking the loan.
- Low rates of interest is another beneficial factor unlike secured loans where the interest rates are more. You can also opt for a commercial mortgage fixed rate of interest which will help you to keep track of the costs of your business borrowings.
- When buying a commercial property with the loan, you can get capital gain, which may be a substantial amount. This can lead to capital growth in the future.
- Interest payable on commercial mortgage loans is tax deductible.
- Where you enter into an agreement in lending out extra commercial space to the lender, you can partially cover up the expenses payable as interest and principal loan amount.
- As commercial mortgage loans extend over a long period, you can concentrate more on business rather than worrying over short term repayments.
Securities
Securities that are usually accepted as commercial properties against commercial mortgages include:
Pubs and restaurants – Long Leaseholds and freeholds only
Factories
Farms
Semi Commercial business holdings
Investment properties
Offices
Hotels, BBs and guest houses
Retail premises
Holiday lets
Cafes and takeaways – Long Leaseholds and freehold only
Financial information to secure commercial mortgage loan
The documents that are needed in support of financial information in order to secure a commercial mortgage loan include:
- Audited Accounts for last three years
- Recent Management Figures
- Profit & Loss assessment for next 12 months
- Bank statements for business for last 6 months
- Brief profiles/cv of partners/directors
- Asset and liability statements of applicants
Commercial mortgage loans are easy to get provided you are able to provide financial information which are acceptable to lenders. You can search online for finding service providers who will arrange commercial mortgage loans without having to face any hassle. You can also check out the services they are offering.