Commercial mortgages are loans used to buy or refinance properties that are intended for business use. Some examples include:
- warehouses
- retail stores
- office buildings
- apartment buildings
- restaurants and cafes
- industrial facilities and factories
Unlike residential mortgages which help homebuyers, commercial mortgages focus on properties that generate income. Banks and mortgage lenders look closely at the property’s income and the borrower’s business stability.
Commercial mortgages involve different terms, rules, and approval processes compared to home loans. Understanding these differences can help property buyers come up with the right mortgage product for their commercial needs.
What’s the purpose of a commercial mortgage?
Just like traditional residential mortgages, the funds are borrowed and secured against the property for commercial mortgages. These can also be used to expand an already existing business, for either commercial or residential property development. If you want to finance any sort of business development plan, commercial mortgages tend to be the principal resource.
A commercial mortgage is also structured for borrowers as well as banks and mortgage lenders. Compared to renting, the borrower hopes to benefit through reduced repayments. On the other hand, the mortgage lender wants to see security in their loan.
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