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Iowa Commercial Mortgage Loan
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Loan taken against some
collateral apart from a residential property is called
commercial mortgage Loan. A commercial mortgage is a loan
taken against any collateral other than a residential property.
The process of obtaining a commercial mortgage is the same as that
of an ordinary mortgage.
The collateral in this case can be any one of the following:
Non-residential property
Non-farm property
Business site
Factory
Business equipment
Inventory
Heavy machinery
Shops, etc.
A Commercial mortgage loans involves a huge loan amount and is
thus used for business or investment purposes whose returns can
help repay the loan as well as earn a profit. Some of the ways a
commercial mortgage can be used are as follows:
For setting up:
o A shop
o A pub
o A restaurant
o A hotel
o A b&b (bed and breakfast)
o A new plant
o A business or office premises
For funding an existing mortgage or loan
For expanding one's business
Adding to business funds
Clearing all the overdrafts in business
Buying vehicles or machinery
Buying land for construction purposes
Commercial mortgage loans are available through banks, commercial
mortgage companies and private lenders. Commercial mortgage loans rates
vary as widely as residential mortgage rates. Traditional banks
offer some of the lowest rates available. However, they have
restrictive lending criteria, which constrains them from making
commercial mortgages for many kinds of commercial properties. Gas
stations with or without convenience stores, for example, can be
difficult to obtain commercial mortgages for. Commercial mortgages
loans can also be difficult to obtain from traditional banks if you
dont have excellent personal and business credit scores.
Hard money commercial mortgage loans are also available through private
lenders who have more flexible lending criteria. Also known as
hard money lenders, private commercial mortgage companies focus
more the current value (todays selling price) of commercial
property than on your personal financial package.
When applying for a Commercial Mortgage Loans, be prepared to
provide with the following:
2-3 years taxes for you and/or your business
2-3 years financial statements
A completed standard commercial mortgage loan application, which
includes a personal and business balance sheet
A description of the use of proceeds of the commercial mortgage
you are seeking
A description of the property
The current selling price of the property
The cost of improvements you will make to the property
An estimate of the propertys value when with improvements
A repayment plan for the commercial mortgage how you will pay
this commercial back
For a hard money bridge loan, provide an exit strategy for the
commercial mortgage will you refinance this commercial mortgage
with a traditional bank after making improvements or alterations
to the existing property or some other scenario?
If you are working with a private commercial mortgage loan company
(hard money lender) be prepared to show a proof of funds with your
initial application. Providing reasonable proof that you are
prepared to cover the closing costs and fund the difference
between the commercial mortgage and the total cost of the property
will make your commercial mortgage loan application move through
the steps to funding much faster.