A commercial mortgage loan helps investors buy income producing and occupied commercial properties. The duration of this commercial mortgage loan can vary from few month to 30 years. The fee as well as the interest rate for the same can vary as well. The people borrowing must know that the kind of commercial real estate they choose, can largely affect the their investments and finances.
When you seek commercial mortgage loan financing, you would want to know if you qualify for the same or not. The mortgage lenders will review you first, and take multiple factors into account to determine whether or not you qualify for the commercial mortgage loan.
The factors can vary from the following
Value of property
Loan to value ratio
Debt service ratio
For every commercial mortgage loan lender, you might face different requirements. Many can share the same requirements, however many might not. No matter what, their determinants and your position is going to determine your loan requirements. Some exemptions might exist for you, however most buyers would want to meet the follwoing five requirements compulsorily.
Credit score above 680
No bankruptcy situation or foreclosures
No tax liens
Minimum 10% cash down payment
Minimum age of business- 3 years
Debt service ratio of the business must be at least 1.15
If you consider yourself an ideal candidate for commercial mortgage loan, you main aim should be to get the lowers interest rates and the best mortgage terms possible. How exactly can you achieve this? This is a significant question.
If you aim at achieving the best rates and the best terms you would want to discuss your terms with your mortgage lender first. Many loan terms would need discussion upon first. Some important question you could cover in the same can be if your rate will be fixed or flexible? Or maybe, you could consider the time of your financing. Is it short term or a long term financing?
Your commercial mortgage lender will need to understand clearly first your investment horizon, and the time for the same. Only than he can determine what terms will suit you the best.
You would also want to consider the fee and the costs that are involved in the closing of deal. Lower rate of interest might seem attractive and lucrative until and unless you see all kinds of costs involved. These costs can affect your rates more than anything. Some lenders might want to underwrite the process before providing you your loan.
The only thing a commercial mortgage loan provider looks for when it comes to you are
Location of the property
Terms of lease
Condition of your property
You can easily obtain commercial mortgage loan by choosing a lender that specialises in the kind of loan you are looking for. Your lender must have a reputation for providing good quality loans in history. Your lender must be trustworthy, reliable, and credible.