As the name suggests, a commercial mortgage is a mortgage on a commercial property, instead of a residential property. That is, a property designed to make money in some way. The basic process for commercial mortgages is the same as with residential mortgages, but many of the details are different. Here is some more information.
Types of Properties
Some of the commercial properties that would require a commercial mortgage, include:
- Shopping malls
- Office buildings
- Industrial buildings
- Golf courses
- Parking garages
These are just a few of the commercial properties that would need a commercial mortgage. You may also need one if you obtained a construction loan specifically to build a commercial property.
Same Process, More Details
In order to get a commercial mortgage, the general process is the same as it is for any other type of mortgage, including a residential mortgage. One of the big differences is that lenders tend to be more fussy when it comes to lending commercial money, and as a borrower, you’ll have to provide more details than normal.
Some of the details you’re required to provide are whether the building has any other occupants, the type of business you’ll be operating and any other kind of document that will show the viability of your commercial venture. Here’s a sample of the information you may be asked to show:
- Professional property appraisal
- Statement of net worth
- Environmental report
- Credit history of all borrowers
- Copy of the signed sales contract
The Right Lender
Through all the extra information and extended process, finding the right lender also helps get your commercial mortgage finalized sooner. If possible, find a lender that has experience with the specific type of commercial property you want to buy.
Some commercial lenders get really specific when it comes to the type of property they will finance, so might as well find one that specializes in what you want. Different lenders also have different terms and conditions, so get to know your prospective lender before you get deep into the process. The key is to ask questions whenever you have them. Any reputable lender will be happy to answer them and provide you with whatever information you need.
If you find yourself in the position where a commercial mortgage is on the horizon, give yourself extra time and plan for a more complex process over a standard residential mortgage.