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Commercial Real Estate Mortgages vs Residential Mortgages
Author David Schneider | May 23,2007
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Getting a mortgage can seem like an intimidating process. There are a lot of different factors to consider when deciding whether the time is right to borrow money to purchase property, including the state of the market and the condition of your own financial health. You also need to be aware that those factors may differ depending on whether you are buying a commercial property or a residence.
Commercial Mortgage vs. Residential Mortgage
What is a Commercial Mortgage?
A commercial mortgage is a loan you get to purchase a commercial property, meaning the property will be used for business purposes. This includes a store or an office building that you might purchase, but also an apartment building whose units you are renting out for profit. Basically, if you're not planning on buying the property for your own personal use, to live in or vacation in, you're going to need a commercial mortgage.
How are Commercial Mortgage Loans Different from Residential Mortgage Loans?
The main distinction between the commercial mortgage loan and the residential mortgage loan is that in the case of the commercial mortgage loan, you are essentially asking your lender to invest in your business. This means that your lender will want to know the credit history of the business in question as well as the likelihood that your business will succeed. When you meet with a potential lender about a commercial mortgage loan, you must remember that they are weighing the risk of the loan based on their confidence in your business venture, rather than your personal ability to pay, as in a residential mortgage loan.
How are Commercial Mortgage Loans Similar to Residential Mortgage Loans?
Like a residential mortgage loan, you can get either an adjustable interest rate or a fixed rate on your loan, depending on your particular needs. You can also build equity in your commercial property and take out a second mortgage or equity loan down the road if you need it. In the case of a commercial mortgage, this will generally be to improve or expand the business, whereas a residential refinancing will be used for almost anything.
How Can You Get the Best Rate on a Commercial or Residential Mortgage Loan?
With any mortgage, be it commercial or residential, your best bet for getting the best rate is to do your homework and compare quotes from different companies and with different options. This used to be a time consuming process, but thanks to the Internet, most of the work is already done for you. Get online and go to quotematch.com. Fill out a simple form in their mortgage section and almost immediately you will be provided with the best rate quotes and options. Whether you're buying a place of business or a home, getting the right rate can save you thousands and the only way to get that rate is to compare lenders using a site like quotematch.com. |
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