If you are looking into getting a commercial mortgage, but aren’t sure where to begin, you may want to read on, as we explore them in further detail below.
Commercial mortgages are different from the regular residential mortgages many people are familiar with, as there are a number of variations that are worth knowing about. In this article, we highlight key areas that are different, with it also being essential to use a specialist when dealing with commercial mortgages.
Higher value of loans
Generally speaking, commercial mortgages are for considerably more money than a residential mortgage, which has a number of knock-on effects. The lender will therefore want to know a great deal about your credit history and debt service coverage ratio before approving.
Many people are familiar with the term credit history, which refers to a person’s personal credit score over a number of years. Debt service coverage ratio, however, is a little more complicated and is just one of the reasons that a specialist should always be used when dealing with commercial mortgages.
Larger down payment
Another area where commercial mortgages differ from residential ones, is often in the initial down payment. Whereas residential properties may only require a small down payment in order to secure the mortgage, commercial mortgages often require a much higher amount. As a commercial venture is frequently more financially risky than a residential mortgage, this consequently filters through to the down payment amount.
Type of business
The type of business that you are intending to open may also have an effect on the commercial mortgages that are available, which is one of the many reasons that an experienced and professional specialist should be used when dealing with commercial mortgages.
Business plan and financial projections
You may also be required to provide a business plan and financial projections, when going about attaining commercial mortgages from a lender. A specialist in the industry will also be able to outline exactly the information and documents you require in order to get the best possible deal for your commercial mortgage.
Rounding up
As mentioned, seeking a specialist for your commercial mortgage requirements is essential. In doing so, they can help you navigate the various different nuances of a commercial mortgage, along with providing help and support to secure the best deal possible.