Commercial Mortgage Lenders

Commerce makes the world go around and despite the worrying economic times of late, it has never been truer than it is today. Property is one of the biggest and most important investments we will ever make as individuals. The property owner philosophy that has grown up in much of the world steers most of us down the road of aspiring to own our own properties.

This gives us a feeling safety and security. As the Brits say, an Englishman’s home is his castle. It is also born of sound commercial sense. Why rent the property you live in when you could buy it? Every dollar you spend on rent is a dollar thrown away. You don’t actually get anything for it.

Okay you get a roof over your head, but investment-wise, you get nothing. If however you are paying a mortgage to buy your home, each dollar spent is an investment directly into the ownership of your very own property. It is no different in the commercial world where commercial mortgage lenders provide the finance needed for businesses to own their own premises.

The fact of the matter is however, that the commercial world is just as insecure a place at the moment, as the private sector. The sub-prime mortgage scandal was the thing that triggered the current crisis in the first place, and the repercussions of that fiasco have now reached the world of the commercial mortgage lenders.

What this means in real terms, is that commercial mortgage lenders are no longer happy to extend finance to clients without putting them through some pretty tough interrogations. Obviously the object of the exercise it to ensure that their money is as safe as can be, so there are a number of ploys that they will use to justify any loans.

Firstly they will want to check out your financial background and your ability to maintain the mortgage repayments. If your company has been in business for a number of years, they will want to see your trading accounts for the past 3 to 5 years to ascertain that your business is both viable and profitable, and that the level of profits are high enough to be able to sustain the mortgage repayments. If the accounts are not satisfactory most commercial mortgage lenders will then seek some other form of security or collateral; for example they make look to secure any mortgage on your and/or your partner’s or colleague’s private properties providing there is sufficient equity therein.

Another way that commercial mortgage lenders can limit their exposure in offering you a commercial mortgage is by limiting the amount they are prepared to lend you against any specific property. This is often expressed in percentage terms against the value of the property and the average that most lenders are prepared to lend is up to 60% of the resale value of the property.

There are two further ways that commercial mortgage lenders can limit their exposure. One is in the valuation of the property. Many lenders now undervalue properties, so if for example you were buying a property for $500,000, they may only value it at $400,000 and then lend you 60% of the lower value.

The final way commercial mortgage lenders have of limiting their exposure is by shortening the period over which the mortgage must be repaid, so if for example they may have granted you a twenty year term when the economy was stronger, they may now only be prepared to offer you a fifteen or even only a 10 year repayment period.

Despite these stricter terms, commercial mortgage lenders are now agreeing commercial mortgages again, and are thereby supporting the growth of industry and commerce.

Please also check out my other guide on amortization schedule calculator and current mortgage interest rate

Commercial Mortgage Lenders

arizona commercial mortgage lenders

Commercial Mortgage Lenders

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