Articles

LISTEN! DON’T BE FOOLED WHILE APPLYING FOR COMMERCIAL MORTGAGE

by Molly Harris Molly Harris is a Mortgage Loan Officer

Before locating your shop, office or factory, the primary concern would be to find out the location first. In fact, it is an important thing while planning for a business and to make it successful, later. You need to have sufficient pounds to your bank account to manage the expenses like initial purchasing costs or construction charges. Most of the companies have to depend upon the external funding source to generate funds for these or other specific costs. Thus, a commercial mortgage can be an effective tool to utilize while managing relevant expenses and reducing the initial cash flow.

As compared to the residential mortgage, this option holds a different perception. Here is a brief DIFFERENCE between both of them:

Commercial Mortgage

Residential Mortgage

It can also be used for generating funds required for specific business activities and also for the whole purchase of the building.

A residential mortgage is completed used for buying a home or for the purpose of moving home.

It needs a high standard of equity according to the commercial property market.

It is quite easy to sell, as there is no such rule in this sort of mortgage.

The rates are with both fixed and variable options and you can choose according to your needs.

Here the rates are also fixed and variables, and there is no such difference between them.

These are risky for the borrowers in terms of losing the repayments. It is why lenders want more deposit.

It is less risky then the commercial one and the lender may be flexible in demanding the initial deposit.

This mortgage is for a maximum of 10 years duration and may attract high-interest rates.

Borrowers can apply for 20 to 40 years duration depending upon the amount taken.


Applying for financial products without any the purpose is not a good thing to do. Many people do that but you should not. Here are some common PURPOSES for which you can apply for a commercial mortgage:

  • F  Purchasing a building
  • F  Extension of existing business
  • F  Investment
  • F  Locating shopping centers
  • F  Garages
  • F  Warehouses
  • F  Hotels and restaurants
F  Factories

  • F  Educational institutions

What Lenders Consider before granting funds?

Lenders are quite concerned about their funds and they tend to be careful enough while allowing the best possible commercial mortgage rates for the borrowers. They consider many factors in which some of them are mentioned below:

*      Most of the times, it has been found that the lenders usually consider only those businesses for the mortgage, which have been successful in the market. They want to look at the income earned, investment and expenditures so that it can analyze everything before releasing the funds.

*      The credit score of the business is also extremely crucial. Again, the majority of the loan providers prefer businesses with good credit scores and consequently, a good reputation in the market. However, it does not reflect that those having a poor credit history are not eligible to seek the mortgage. There are some lenders offering commercial mortgages for bad credit businesses as well but the interest rates need to be analyzed before.

*      Debt Coverage Ratio (DCR), the lenders also consider this as among the primary factors. Actually, they want to know whether the business income is sufficient to cover the due amount. It helps them to identify whether a particular business is capable enough to make the repayments on time or not.

Have any doubts? Why not use a commercial mortgage calculator?

Calculators have a big role to play in finalizing the best deal both for the borrower and lender. You can easily understand the entire process and limitations while applying for the mortgage and it becomes easy to walk in the right direction. It clearly supports you in terms of analyzing the compound interest, how much amount you can borrow, and what would be the repayment term. Image result for commercial mortgages calculator uk

Finding them should not be difficult at all, as many lenders have their own online commercial property mortgage calculator without charging anything. To name a few, Barclays, Lloyds Bank, HSBC UK and from other private lenders like Shine Mortgages, and White Oak UK come into the picture.

commercial mortgage calculators

To find out the suitable monthly payment, use the calculator and put these details:

  • C  Mortgage amount
  • C  Down payment
  • C  Interest rates
  • C  Number of years

When it comes to private lenders, they have customized their websites more user-friendly and in fact, few of them have already inserted commercial bad credit mortgage calculator for the concerned individuals. Use them and know how much you are eligible with having a less-than-stellar business credit history.

To sum up...

Running a successful business requires a significant amount of money to your bank account. Opting for a commercial mortgage gives you some comfort, but only when you have the right lender. Do not waste your time in applying to unsuitable loan providers. Do online research or take some specialist’s guidance, results will come into your favor. 

About Molly Harris Junior   Molly Harris is a Mortgage Loan Officer

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Joined APSense since, May 6th, 2019, From Manchester, United Kingdom.

Created on May 21st 2019 05:48. Viewed 266 times.

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