A Commercial Mortgage Is Very Similar To A Personal Mortgage

Category: Finance, Mortgages.

A commercial mortgage is very similar to a personal mortgage. Unlike residential mortgages- commercial and semi commercial lending falls into a very strict lending criteria.

The only real difference is that a company will make the purchase rather than an individual. Commercial lenders are not your normal high street building societies. It is often better to approach a commercial broker or specialised commercial lender. Most banks and building societies will offer commercial mortgages, but they have very strict lenders criteria. You will find that the criteria will be a lot more relaxed. This can be extended to 100% or more with additional security. Most lenders will give you 85% of the purchase price.

You can take out a repayment or interest only mortgage with the option of repayment or interest only. Just like residential mortgages, there are always special deals available. The period of the loan can be anything from 1 to 30 years. You can also choose between a variable or fixed rate. You first complete a very simple application form( one A4 sheet) this will provide enough information for the lender to give you a' Decision in Principle' . The process is very simple.

This is a letter from the lender detailing the terms and rates of the mortgage based on the information you have provided. This requires a lot more detail information about the business and the property. Assuming you are happy with the' Decision in principle' offer you will be asked to complete a formal application. The property will then be valued and the lender will make an official offer. You are now ready to pass the deal over to your solicitor. This may have changes since the decision in principle due to issue's raised during the formal application or the valuation being lower than hoped.

They will complete the paperwork and transfer the funds.