1Consider the maximum loan term. Commercial mortgages require a balloon payment, which is a total payoff of the loan, in a specific amount of time. Many borrowers sell the property or refinance the loan at that time.
Find a maximum loan term that is longer if you want more time to pay off your commercial mortgage. Most lenders have a term of between 10 and 30 years.
2Compare the loan to value ratio. Banks usually allow you to borrow up to 75 percent of the value of the commercial property.
Choosing a loan that will allow a higher loan-to-value ratio will enable you to borrow more money than a loan with a lower loan-to-value ratio.
3Look at approval times. You can compare commercial mortgages by asking for an estimate on how long it will take the lender to approve your mortgage.
Ask if a committee will need to review your application. This can hold up the approval process.
4Ask for a Letter of Intent or Commitment Letter before applying for a loan. A letter of intent will disclose rates and terms and is indicative of a serious lender interest.
5Ask about the lender's appraisal process. To get a commercial mortgage, the lender will want the commercial property to be appraised.
6Compare fees. Some lenders will charge you an application fee even if they reject you for a commercial mortgage. Be sure to understand all fees before applying.
7Look at interest rates. As with residential mortgages, you can get a loan with a fixed rate or an adjustable rate.
Take a commercial mortgage with a fixed rate if you want to pay the same amount of interest for the length of the loan.
Look for an adjustable rate if you do not mind paying a different amount in interest from year to year.
Compare the amount of interest you will pay over the entire life of the loan.
8Compare the amount required for a down payment. A commercial mortgage will require a deposit, usually of at least 15 or 20 percent of the purchase price.
9Make sure you are comparing non-recourse loans. If you default on your loan, a non-recourse mortgage means that the lender can repossess the property only, and cannot recoup any additional damages from you.
10Talk to different lenders about their commercial loans. If the terms are similar for all the commercial mortgages you are comparing, work with a lender that has a good reputation, or someone your business has worked with before.
11Use online tools to compare mortgages. There are websites that take your information and then provide you with a list of commercial mortgages available for you. The system will review your requirements, screen lenders and provide you with about 30 options.
No comments:
Post a Comment