Home Equity Loan
Commercial Mortgage
A Commercial Mortgage is a loan made on real estate collateral, other than a
residential property, in which a mortgage is given to secure payment of
principal and interest, or just interest alone.
A commercial mortgage is similar to a residential mortgage, except the
collateral is not a residence, but a commercial building or other business real
estate.
Typically the mortgage is arrange by a business. Because the business may be
formulated as a partnership or limited company the assessment by the lender as
to the creditworthiness of the business is more complicated.
The length of the loan usually runs from 5 to 30 years.
Collateral
Examples of commercial real estate include: Shopping centers, industrial buildings, office buildings, golf courses, resorts, hotels, parking garages, car washes, retail stores.
Why use a Commercial Mortgage
Common applications of commercial mortgages include: construction of a new building, purchase of premises, expansion of facilities or modification of existing premises.
Interest rates
Interest rates are usually higher than for a mortgage over residential
property.
The most common variant of commercial mortgages is a fixed rate commercial
mortgage where the interest rate remains constant throughout the term. Loans can
also be variable or capped.
A second commercial mortgage is an additional loan on a commercial property
secured behind that of the first lien.