The concept of commercial mortgages

by Hallary Duff It analyst

The word "mortgage" We used to have begun only recently: a relatively new concept for the Russian practice. If the commercial mortgages, housing is becoming more common, the commercial real estate mortgages - has only irregular cases.

The fundamental nature and conditions of commercial mortgages

Mortgage loan grants for the purchase of non-residential premises: stockroom, office, etc. The meaning of the mortgage is to borrow the purchase of commercial real estate under the same pledge. In contrast, housing loans, commercial mortgages are short term loan, but rather high interest rates.

The scheme of the commercial mortgage is similar to non-residential mortgage housing: there are the same procedures for assessing the borrower and the facility, the requirement of the initial deposit. But there is a fundamental difference - the law does not allow companies to draw up a mortgage on the property until the conclusion of the sale. The object must first acquire and then you can pledge to get the money.

An important legal aspect of commercial mortgages - the registration of ownership of non-residential premises, while the mortgage encumbrance Federal law does not provide. The Treaty on mortgage commercial real estate is subject to general rules of the Civil Code of the Russian Federation on the conclusion of treaties, as well as the Federal Law "On Mortgage (mortgage). According to paragraph 1 of article 9 of the federal law in the contract of mortgage must be given to mortgage his assessment of substance, size and term of the obligation secured by a mortgage.

Commercial borrowers are likely to be confused when their commercial loan application is turned down and will probably be unsure as to why it happened and what to do next. For each of the five most important reasons that a bank might decline a commercial mortgage, a practical plan is provided for converting the declined commercial real estate loan into an approved business loan.
Two reasons (tax returns and business plan requirements) could impact virtually all businesses. Many dealing loan officers will begin their business loan and commercial mortgage review process by stating "We will need to see at least three years of tax returns" and "Can you show me your business plan?"

Hard money commercial mortgages are also available through private lenders. Unlike usual banks, private lenders have more flexible lending criterion. Also known as hard money lenders, personal, commercial mortgage companies focus more on the current value of a commercial property than on your personal financial package.
Private lenders are often able to fund a commercial mortgage if there is a clear picture of how the loan will be paid back. When seminal whether to fund a commercial mortgage, private lenders will repeatedly look at the ratio of income to operating fixed cost. Unless a borrower has repeated defaults and bankruptcies, private lenders are not as disturbed if the borrower has less than perfect credit.

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