A commercial real estate loan can be used for many purposes, including purchasing, refinancing, or redeveloping the commercial property. These loans differ from regular residential mortgages in several ways, so it's important to be aware of the key differences before applying. Here are some tips to help you find the right commercial real estate loan for your needs.
Undergo a Prequalification
If you are looking to take out a loan to purchase a commercial property, the lender is going to want to see documentation about your business to make a decision. This means that you will need to start gathering this information as soon as possible. Additionally, you should make sure that your tax returns and financial reports are accurate and ready to be submitted to the lender. You should ask your lender if they require you to submit business tax returns as well.
Compare Various Lenders
When trying to secure a commercial real estate loan, it may be beneficial to look into multiple lenders. This way, you can compare different loan programs and find the one that best suits your needs. Keep in mind that the best loan for you may not be offered by the first lender you consult.
Establish a Separate Funding
You may find it easier to secure funding for a commercial property if you have some money saved up, equity in another property, or a line of credit.
Inquire About Payment Deferral
To get a commercial mortgage loan, most lenders will require an upfront payment of 20 per cent of the loan amount. The loan will usually be structured so that the borrower can make monthly payments. Some lenders will allow the borrower to defer their payments for a certain amount of time, allowing them to continue making monthly payments without having to pay a large lump sum at the end of that period.
Consider Your Credit Score
The vast majority of lending firms necessitate the borrower's base credit score. Fortunately, some activities can help better your credit score, like making on-time payments. For example, you might request your credit card company to up your limit, so you have more leeway financially. You can also try to persuade your credit card company to delete any late payments or charge-offs appearing on your credit report.
Opt for a Shorter Loan Term
A shorter loan term for a commercial real estate loan can help with your business's cash flow by making it easier to make payments when you get your next business paycheck.
Choose a Suitable Interest Rate
A commercial real estate loan with a higher interest rate reflects the risk of the loan. This can be helpful when refinancing a property that has been part of a foreclosure or when trying to sell the property at a higher price.
Conclusion
Commercial real estate loans are financing options used to purchase or improve a commercial property. Because commercial real estate can be expensive and complex, it can be challenging to get a loan from a traditional lender.
However, many lenders specialise in commercial real estate loans and can offer various financing options to fit your needs. You may need to meet with multiple lenders to get the best loan for your project and compare their terms.
If you need a mortgage loan calculator, trust Wealthy You. We are an Australian mortgage company servicing Sydney for almost a decade. Because of this, we can offer you various mortgage solutions to meet your specific financial needs. As an alternative lending specialist, we make refinancing your home simple. Contact us now.
