There are two primary types of mortgages, commercial mortgages, and residential mortgages. Commercial mortgages are registered on properties that are used by businesses and residential mortgages are registered to homes and other non-income generating properties. Commercial mortgages are usually registered in the name of a business rather than the name of an individual. For commercial mortgages, assessing credit score and income is usually much more complex. Commercial mortgages are generally more expensive and more difficult to qualify for than residential mortgages.
Generally, any property that is used by a business to generate income is considered to be a commercial property. This can include the building where the business operates, large residential complexes, and raw land. The following buildings are all examples of commercial properties:
Aside from these properties, many other properties can be classified as commercial. Rates and fees for a commercial mortgage can vary greatly depending on the type of property. An experienced commercial mortgage broker can help explain what rates and fees you are likely to pay as well as which lenders are likely to approve the mortgage. This means that it is very hard to predict exactly how long it takes for a commercial mortgage to close.
Mortgages for residential properties can usually be arranged in around 90 days with a bank or as little as 10 days with a private lender. The work the lender needs to do on a commercial mortgage is much more than with a typical residential mortgage. The lender must check in depth both the abilities of the company to make payments and the potential profitability or utility of the commercial building.
Most commercial mortgages have approval criteria that are not applicable to residential mortgages. The requirements are very strict, as most commercial mortgages deal with large amounts of money.
Trying to find the mortgage needed for your business needs can be a very stressful experience. Finding a commercial lender can be very time consuming and frustrating. A licensed mortgage broker can greatly simplify the entire process of getting a commercial mortgage. A mortgage broker can quickly analyze your situation and determine your chances of getting a private mortgage. The broker can also advise which lender is most suitable for your situation. Banks tend to service the lower risk mortgages while trust companies and private lenders service the high-risk mortgages.