What can you expect when applying for a commercial mortgage form a bank or non-bank lender? The commercial loan process is very different from the common home loan process. Commercial loans, unlike the vast majority of residential mortgages, are not backed by a government entity.
Commercial lenders are much more risk-averse and charge a higher interest rate than on home loans. this is generally accurate irrespective of whether you deal with a high street bank or a non-bank commercial property fund like Chifley Securities. Some lenders go even further. They look in to the borrower’s business as well as commercial property to ensure that it will serve as collateral for the loan.
Before going in to a commercial mortgage, there is a list of questions you should ask yourself, beginning with how are you going to meet the loan repayment terms? Usually, a bank will require you to repay your business loan much sooner than the due date.
Now, the real question is will you be able to repay in such a short space of time?
Many borrowers don’t end up saving enough and turn to refinancing or trying to re-qualify,for their loan. Though it may be necessary, you should truly think of a plan to ensure that all of your payments will be made on time and if possible before time.
The next question you should ask yourself is how much you can or should borrow. Most bank loans do not allow a second mortgage so it is important that you get into the loan process intending to borrow enough to meet your current business needs. Commercial mortgage lenders like Chifley Securities are somewhat different in this area.
Traditionally, an acquisition loan for a borrower who is buying a new property, banks will typically require a down payment of thirty five percent. Some may allow borrowers to make a smaller down payment, maximizing the loan-to-value. However such loans aren’t usually bank loans, but are offered by direct commercial lenders like Chifley Securities.
Commercial mortgages in comparison to a common home loan carry greater risk. When applying for one, be sure to have a plan in mind!
About the Author: Dominic Lambrinos
Dominic Lambrinos is a financial expert who provides professional business finance solutions, commercial financial engineering, expert review of financial submissions, negotiation, equity raising, business sales, and trade financing. Dominic is also a sought after finance business trainer, and accomplished public speaker.
Under Dominic’s guidance , his team can also prepare professional financial submissions, review financial statements, provide financial accounting, business administration, development of information systems, marketing and sales skills, computer and Internet sales skills.