If you operate a business, you probably wish to acquire a mortgage to purchase or refinance the property in which you do or will run your business. Commercial and industrial mortgages are set up especially for businesses and their investors to give companies a chance to get funding for income producing properties.
You don’t have to run a Fortune500 company to be approved for a commercial or industrial mortgage. Shopping plazas and even raw land owners can apply. However, do you know what mortgage you need?
There are four main differences between a commercial and industrial mortgage. Depending on the type of business you operate, you may be better suited for one specific type. Explore these four differences and see what’s right for your company!
1. Industrial mortgages are actually a type of commercial mortgage. Commercial mortgage is a blanket term for any funding that is over $1,000,000 for long-term financing for income generating properties. Industrial mortgages are under this umbrella because buildings like factories generate income.
2. Commercial mortgages can have housing units in them, while industrial mortgages cannot. You can receive a commercial mortgage for a multi-residential property that has five or more units in it. Because condos and apartment complexes are only residential for the tenants who live there, you will need a commercial mortgage to secure funding for those kinds of buildings. On the other hand, industrial mortgages are only for spaces that are not considered dwellings like warehouses, workshops, storage units, plants, factories and manufacturing sites.
3. The time is takes to get a residential mortgage is about 90 days. In some cases you can even close on your house in two to three weeks. With commercial mortgages there are generally never quick closings. They can take anywhere from two months to a full year. Industrial mortgages can take even longer because there are more items your lawyers and brokers will need to incur to move the process along, such as environment reports, industry experience documents and a business plan for new companies with detailed income projections.
4. With commercial mortgages there are a different loan-to-value ratios. For a multi-unit housing complex with an attached storefront you can receive around 80% of the property’s value in funding (sometimes it can be as high as 85%). For industrial mortgages the standard is 75%.
Northwood Mortgage™ can help you attain a commercial or industrial mortgage. Contact us today and we’ll get your business the financing it needs.