A Discussion of Commercial Mortgages

If you have ever applied for a personal or residential mortgage, you may be under the false assumption that applying for commercial mortgages is equally simple. This is in fact not the case, commercial mortgages are significantly trickier to apply for successfully, let’s take a look at some of the main reasons for this.

• Commercial mortgages operate under a very different set of lending criteria to personal mortgages. If you do not understand these criteria, and do not have the time to research and learn how these criteria work, then you will find that your application will probably be unsuccessful.

• The application process for commercial mortgages can differ significantly between lenders, you will need to approach a wide selection of lending establishments to receive the best financial product for your needs, meaning you will need to track and control multiple applications that will probably follow completely different processes.

• When applying for commercial mortgages, you will be asked to submit a wealth of supporting documentation; this can include a full business plan showing the effect of the mortgage upon your company’s financial forecast, and a fully audited set of company accounts. These documents will need to be prepared in a format that the lender you are approaching requires them, as discussed above, there are very few standards across lenders, and you may well need to produce several version of each document, one for each lender.

• Individuals who are seeking their own commercial mortgages will not have access to the full range of lenders and mortgage products, only qualified professionals will be able to contact all lenders directly, requesting information about their specific products.

The best way to acquire the best in commercial mortgages is to contact a professionally qualified commercial mortgage broker. By selecting a good broker you will have access to all of the skills needed to make sure that your application is approved and you receive the best from your mortgage product. A broker will be able to assist you in creating and distributing the required supporting documentation to a whole range of lenders in one shot, they have access to a far wider range of products and are able to submit a single, unified application to multiple lenders at one time. This means the entire application process is vastly simplified. Your broker will also be able to search a wider range of products, meaning you are more likely to get the best in commercial mortgages, many of these products are made only available to brokers, without a broker you would not be able to apply for them, these are often the premium commercial mortgages, and represent the very best products the lenders offer.

To sum things up, applying for commercial mortgages is a vastly more complicated affair than applying for a personal mortgage; you would be best advised to seek the services of a qualified commercial mortgage broker to act on your behalf as your point of contact into the major lending establishments.

Obtaining Commercial Mortgages

If you have ever gone through the process of applying for a residential mortgage in the past, you may be forgiven for assuming that commercial mortgages are equally painless to acquire. Although in many cases this can be true, the process involved in successfully availing yourself of commercial mortgages is significantly more complex.

Firstly we need to consider that there are two separate types of commercial mortgages, although they are both closely related. The first type of commercial mortgages covers buying an existing business that has a property attached as the business premises, a restaurant, shop of bar would be good examples of this kind of finance. Secondly we have a mortgage that is used to acquire property for an existing company; in this situation the business will be buying new property such as office space or warehouse space.

You will also be asked to provide a whole lot more documentation to support your mortgage application than you were with a residential mortgage. You will certainly be asked for a set of audited company accounts, along with a well produced business plan showing how your choice of commercial mortgages will affect the business. You may also be required to present personal guarantees and full information about the directors and shareholders of the company.

One particularly sensible way of approaching the acquisition of commercial mortgages is to acquire the services of a professional commercial mortgage broker. Your broker will have access to a far greater selection of lending options than you will, he will also have all of the information about each lending package offered, and will be able to select which of the commercial mortgages is right for you, and that is likely to see a positive outcome to the application.

By employing the services of a broker you will have expert help in preparing all of the required documentation, along with advice on hand whenever you need it. In effect, your broker becomes your spokesperson and personal assistant all rolled into one for the purpose of ensuring that you are accepted by a lender suitable to you and your business.

Even if you could find the same selection of lenders that a broker has available to him, you would still need to fill out a separate application form for each lender, along with preparing all documentation to the standards each individual lender requires. This would be a mountainous task and one that could not be undertaken lightly. A broker can produce one single application, which he will present to every lender in a standard format, removing the obstacle of having to deal with each lender independently.

In summary, obtaining commercial mortgages is neither straightforward or assured if you approach it on your own, it is recommended that you use the services of a specialist commercial mortgage broker who will be able to handle the entire application process on your behalf, and ensure that you receive the best form of funding for you business.

Commercial Mortgages

A commercial mortgage is a method for businesses to secure the payment on a building or property which will be mainly used by the business.  Commercial mortgages are taken out by all kinds of businesses including sole traders, partnerships, limited and public companies.  Commercial mortgages can be used for a variety of different purposes and they possess different attributes and terms to individual residential mortgages.

Commercial mortgages are usually used to finance a new property for the purpose of the business, but there are other motivations for businesses to take out a commercial mortgage, for example they can be used to help finance the rebuilding or redevelopment of a property owned by the business, another use could be to help finance the purchase of land which will be used by the business or will be used to build a property on.

Businesses commonly use commercial loans to facilitate the purchase of properties such as headquarters, warehouses, shops, offices and even land.  Commercial mortgages are also been used to help finance the takeover or acquisition of another company or another company’s building.

Commercial mortgages are usually much more flexible than residential mortgages, but often a business owner will find that the interest rate will be slightly higher.  Most commercial mortgages are secured against the property itself, therefore the lender will always have a legal right over the property until the full balance has been repaid, and this is used as protection for the lender in case the borrower defaults on their payments.  Commercial mortgages are typically repaid over a period of between 10 and 20 years, this however does entirely depend on the borrower’s circumstances and how much finance has been borrowed for the mortgage.

Financial institutions and mortgage companies will usually offer a tailor made mortgage for business clients due to the specialist nature of the transaction, also by offering this flexible service, the mortgage company will entice the custom of valuable business clients which can prove to be a very successful investment for the company.  With flexibility comes complexity, there are more terms and conditions involved in commercial mortgages which can make them very complicated, many companies get help with this by hiring a commercial mortgage broker or a consultant to smooth over the whole process.  Without a commercial mortgage, it is very difficult for companies to improve and expand especially small or new companies who are looking to get a foothold in their respective industry.