What exactly is Commercial Property Finance? Commercial property finance contains various financial products available to property investors and business owners who wish to remodel, renovate or expand commercial property owned by them. These financial products are often referred to as commercial mortgage loans. A commercial mortgage loan is a form of debt where a lender agrees to lend the borrowed money because the borrower will pay back the lender a certain amount of money (called the “interest” in this instance). The interest rate varies depending on the risk involved in lending the funds and the borrower’s creditworthiness.
As with any loan, there are benefits and risks involved. For example, a residential mortgage is usually a more accessible and more manageable loan than commercial property finance. This is because residential mortgages are often secured against the homes that they are originated on. Another advantage to residential mortgage loans is that they generally have a much shorter repayment schedule than commercial real estate loans. While the repayment schedules may be considerably longer for commercial real estate loans, it is still typically more concise than the amount of time needed to repay a residential mortgage. Finally, commercial real estate loans often have more minor risk features than residential mortgage loans.
Commercial property finance comes in many forms: fixed purchase price, purchase price, and auction finance. Fixed purchase price finance is a type of finance in which the buyer of the property (the owner) is provided cash upfront in the form of a down payment for the property. Most commercial properties are sold through a classified ad or online listing. Purchase at price finance allows property developers to obtain cash upfront for the property’s total purchase price, including any necessary repairs.
Auction finance is a type of commercial property finance solution. Auction finance allows lenders to secure the loans of property developers by putting up a high price for the property. When the property is sold at auction, the winning bidder then pays off the loan with a lump sum payment. However, this solution may be risky for property developers and requires a great deal of skill in negotiating the final terms of the sale. The borrower will need to ensure that the final cost of the loan is less than the amount expected to be paid back upon the successful sale.
One alternative to traditional commercial lending is a small business loan. Small business loans are designed specifically for business startups or expansions. These loans provide small business owners access to financial resources that can be used for day-to-day business transactions. Typically, the funding is obtained through payroll deductions from employees and equipment purchases. As a result, the businesses have significantly less risk compared to other forms of financing. Small business loans do not require a credit history or past financial performance review.
A commercial loan broker can help you find the financing you need to buy commercial properties. Commercial property brokers typically earn their living by assisting borrowers in obtaining the commercial loans they require. In addition, some offer financing through SBA loans and FHA loans. These alternatives can help you find the commercial real estate loan that best suits your specific needs.
Commercial property development finance is a specialized form of lending that involves securing a loan using land as collateral. Although this form of financing is risky, many commercial lenders have adapted their lending programs to meet borrowers’ needs better. Many lenders have also created dedicated programs for new or startup companies with past credit ratings or reliable track records. By providing the unique needs of these companies, many lenders have tailored their commercial property development finance programs to meet the needs of these companies better.
As you can see, there are a variety of different sources for Commercial Property Finance products. Regardless of your specific needs, the opportunities for Commercial Property Finance are vast. If you are a business owner seeking to expand your business, you may want to consider purchasing your property portfolio and developing it into a valuable business asset. Likewise, if you are a first-time homebuyer or a property developer considering purchasing multiple properties, Commercial Property Finance products can provide a great solution.