Everything You Should Know About Commercial Real Estate Loans
The number of commercial real estate have transacted is about 48 billion square feet so it a lot of restaurants, office buildings and hotels. You can use a commercial real estate loan when you want to pay high cost of owning and maintaining property which is needed for your valuable business. People need to be financially smart and start building equity after getting the commercial real estate loan.
Building equity will grow with time and have enough money to repay the loan especially when you can make huge down payments pay the principal swiftly. People are still confused on how they can access a commercial real estate loan and find one that is good for them. Knowing what a commercial real estate loan is about helps you since is a lien on commercial and not applicable for residential properties. Your real estate property provides an income then you can get a commercial real estate loan.
The commercial real estate loan lenders require the borrowers to lease out the property but still occupy 51% of the building, so they still have an opportunity to collect rent. Some individuals are not comfortable taking too much space in their properties, so they settle for an investment property loan. Before receiving the commercial real estate loans the lender will have to evaluate your credit and loan will only be secured by the property being purchased.
There is high chances of getting commercial loans from banks when you have low depth good personal credit and a successful business. Before providing the loan, the lender will have to look at the loan-to-value ratio, personal trustworthiness and collateral the borrower can provide but you have to show them 3-5 years of your tax returns and financial statements. Any partnerships corporations, developments and real estate investment trust that wants to get a commercial property can get health and quickly receive a real estate loan.
You need to know your options when choosing a commercial loan like how long it will last, but the common one takes about 30 years and is a fixed mortgage. The amortization period of a commercial mortgage loan is longer compared to a residential loan plus it might be written off. Although residential mortgage down payments are 20% it is slightly higher for commercial loans like 10-50%, and it has fixed interest rates, but sometimes it won’t fluctuate depending on the underlying indexes. Some basic commercial real estate loans are the SBA loans but talk to the lender to see whether they have fully amortized loans or interest-only loans depending on your needs.