Quite simply a Commercial Mortgage is a loan secured by property that is used for business purposes. As with personal residential mortgages for houses there are a significant number of lenders from which to choose and a variety of terms are available.
Commercial Mortgages are used for a variety of purposes and mostly commonly for the purchase of the property itself – this could be for a new or an existing business. Occasionally a commercial mortgage is used to raise capital for business expansion purposes. These types of commercial mortgage are generally known as ‘Owner occupied Mortgages’
Another type of commercial mortgage is one that is used to acquire commercial premises for investment purposes. This is where the owner of the property does not actually occupy it but has granted a lease (or some other formal arrangement) for another business to use the premises and in return receives a rental payment. Thus income is derived from the property and is used to repay the commercial mortgage.
Yet a further type of commercial mortgage is one that is used to acquire land (or buildings) that is to be developed into either residential properties or commercial units that are subsequently sold. Clearly only a sort term commercial mortgage is required as the loan will be repaid at the end of the project. Although it is also feasible to convert the short term loan to a longer term commercial mortgage if the property is to be let out.
As is usual with secured loans the lender will have legal rights over the property until the commercial mortgage has been repaid. These will include repossession should repayments not be made
designed and hosted by