Commercial Mortgages - What you must Know

If you are looking to expand your business, you might have realized that the cost of renting has become great over the years. At the same time, a commercial mortgage can offer finance options for your business that you might not even be aware of.

In general, commercial mortgages are meant for refinancing or buying property for commercial purposes. Like the traditional mortgage, this mortgage is also borrowed and secured against a property. If you want, you can also expand your existing business using commercial mortgages. With a commercial mortgage, you get to use finance to meet your unique requirements.

With commercial mortgages, both the lender and the borrower benefit. It is best when the borrower is looking for reduced repayments and the lender wants to secure the loan. It is noteworthy that a commercial mortgage is a long-term loan that provides borrowers with the cash to purchase business premises. You get up to 70% of the property's value as a loan and the lender depends on the business.

What are the Long-Term Benefits of a Commercial Mortgage?

A commercial mortgage has a lot of benefits for you. It doesn’t only let you buy your business property but is more of a source of business funding. When you have your own business, you are safe from the increasing rental charges. These mortgages can help you in future-proofing your business as they allow it to access equity with the increasing property price.

There are many benefits of choosing a commercial mortgage. As well as being cheaper than renting, it allows you to:

• Sub-let or lease parts of your business property to create an ancillary income
• Buy new equipment
• Consolidate business debts
• Expand trading
• Release capital for investment or growth

With a commercial mortgage, business owners can use it for running their business, renting out, buying a business property, and even unlocking the equity within the already-owned building. It simply means that you have plenty of options to finance your business.

Commercial Mortgage fees you must know about

You need to know that there are various fees associated with commercial mortgages that you will have to pay along with the interest rates, namely:

• Lender Fees
  The fees vary from lender to lender. In general, a lender will charge you 4 to 6% of the mortgage amount.
• Broker Fees
  Your broker may ask for a fee of about 1 to 2% of the total amount to find the best rate for you.
• Legal Fees
  These are the fees that you have to pay for the services provided by a real estate lawyer or notary.
• Appraisal
  The more the worth of the property, the more you will be able to borrow. It also means that you will have to pay more for your down payment.
• Title Insurance
  This is a one-time cost that is meant to protect the legal property owner from title fraud.

 In order to get the best commercial mortgage rates, you must compare different mortgage rates by various lenders. There is no denying the fact that different lenders offer different rates. So make a wise decision by finding the best option for you.