If you are enthusiastic about expanding your business, you should consider buying a commercial building. You have to make your move when the market prices are attractive. If you plan on taking up a commercial mortgage then you have to be familiar with the process. Here are important steps to follow when getting a mortgage for a commercial property.
Consult your Banker
First you should make an appointment with your banker to discuss this matter in depth. Since real estate matters vary from area to area, it is wise to speak with a mortgage specialist who understands the trend in your area. Moreover, you should find out the purchase price, mortgage interest rates and the down payment.
Locate the Commercial Property to Buy
Finding the best piece of property for purchase is the next vital step. You already have some prospective figures as given by your banker to guide. You can also ask a reputable commercial realtor to help you since he or she understands the market value of most commercial property. A realtor will let you know how flexible the seller is in terms of prices.
Look for a Mortgage Lender
Carry out an extensive research to find the most attractive offer. Don't depend entirely on your banker's opinion. However, you should not overlook your banker's advice since local banks are worth considering and quite competitive. Compare rates offered by several lenders dealing with commercial mortgages. Evaluate the amount of loan you will receive depending on the commercial property you have chosen. On the other hand, consider the structure and terms of the mortgage they are offering.
Make an offer on the Commercial Property
The reason why you need to choose you lender first before making an offer is that your offer becomes highly attractive. This allows you to negotiate further. Negotiations are important for both the seller and buyer to ensure you both benefit from the sale. Matters decided upon during negotiations should be made official through signing a contract.
Make a Follow Up
After signing the contract, you have to keep on checking with your mortgage lender on a weekly basis for a start. Obviously, some days will pass by without any updates but you will be able to know about delays or extra materials needed in advance.
Close of your Commercial Mortgage
You ought to celebrate the closing of the deal. It is now official that you are a commercial property investor. This may be the beginning of successful commercial mortgages in your name. Most people cannot different between commercial property mortgages and residential ones, here are some notable differences.
Commercial mortgages have a high down payment as compared to home mortgages. This is because the risk involved in commercial mortgages is higher, the lender normally wants the borrower to make some payment as a form of equity.
Mortgages for commercial property usually have a high interest rate and is shorter termed than mortgages for residential homes. Banks are ready to offer reasonable interest rates on home loans because their capital investment can easily be recovered through the sale of mortgage loans in secondary market.
Commercial mortgages are focused on actual property and the flow of cash as compared to residential loans. When shopping for commercial property mortgages be ready to give details about utility payments, the type of maintenance required and cash flow related questions.