A commercial mortgage is usually a conventional mortgage loan secured primarily by commercial real estate, including a shopping mall, office building, industrial facility, or apartment complex. Typically, the proceeds from such a commercial mortgage are usually used to purchase, renovate, or refinance commercial real estate. The commercial financing is sometimes extended to include a number of other related industries, including manufacturing and distribution. A large part of commercial loans is for business-to-business transactions; however, there are many commercial financing programs designed for small businesses. There are also special types of commercial mortgages for business-to-personal transactions like leasing, capital equipment purchases, and land contracts.
Most commercial mortgages are collateralized by the use of a combination of land, property, and personal property like cars and boats. These types of commercial mortgages are designed to provide businesses with financial support during times when their revenue is low, but they still need to make a profit. Usually, these types of commercial mortgage financing are very short term loans; they usually have very short repayment terms and very high rates of interest.
Commercial mortgages are generally available in two forms: fixed rate loans and variable rate loans. Fixed rate loans are made to a single lender and generally have higher rates of interest than variable rate loans. The purpose of a fixed rate commercial mortgage is to minimize the amount of risk that the lender must bear when he extends the financing to a specific business and it also provides a greater level of protection for the lender if the business in question does not perform as well as expected.
Variable rate commercial mortgages, on the other hand, are much more flexible than fixed rate ones. The interest rates are adjustable and the loan term may be longer. Some businesses can even avail themselves of both the fixed rate and the variable rate mortgage programs. Depending on the type of business that the lender intends to finance, the rates and terms for the variable rate commercial mortgages will differ.
Because of the various options that are available, there is much more information on commercial mortgages in the Internet than there is about residential mortgage loans. This is because most commercial loans are larger than residential loans and a lot of information is often found on commercial loans online.
A business that wishes to take on a large amount of debt should consider commercial loans if the company’s projected profits are expected to be lower than its debt obligations over the next ten years. A company that is seeking additional funding, Commercial Mortgages, for example, may want to obtain a long term commercial mortgage to fund expansion and growth. may also seek out financing to fund acquisitions, expand existing operations, or make improvements to property or facilities. No matter what the business’ needs are, there is a commercial loan that will be able to satisfy them.