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Commercial Mortgages How Do They Work?

By Expert Author: Matt Davies

Many companies rely on commercial mortgages every year. Whether you are looking to get into more commercial leasing or a big company hunting for a new place to set up their office commercial mortgages are used to flow cash into a business without requiring you to sell another asset and or pay all together.

So how do you think commercial mortgages work?
Business mortgage (also known as owner-occupier mortgage)

If you are looking for a mortgage to purchase business premises you will need a business mortgage also known as owner-occupier mortgage. If are already an owner of business premises and want to refinance the property you will need a business remortgage (or owner-occupier remortgage).
2. Commercial investment mortgage
The other commercial mortgage type is commercial investment mortgage. If want to invest in non-residential property to rent it to other businesses you will require a commercial investment mortgage. If you are an owner already of a commercial property for investment purposes and want to refinance it, you will require commercial investment remortgage.

Commercial mortgages are similar to residential loans
This means the elements of a commercial mortgage is the same as to an individual securing a loan for their home. The real estate property will be used as finance by the lender in order to secure the loan and during the event of default lender will get back his property.
Some difference does exist
The word mortgage usually makes people to wonder as it’s a loan purely to buy a big plot of land with a building on it. But this is not the case commercial mortgages can also be considered by companies wanting to invest – for instance perhaps new staff coming in, by starting up a new branch or owning a new technology. Though, commercial mortgages vary from personal home loans in many ways.

Commercial mortgages better than business loans
Commercial mortgage is comparatively less expensive and best way a company can raise capital since the building, is the finance, meaning the loan is at least risk for the lender. This makes a business benefit a huge amount, with less interest rate for a long time than if they were just requesting a common business loan.

They’re not always possible for small businesses
Before getting into a commercial mortgage you may want to wait and prepare. The biggest of lenders do not consider application with lesser than three years of audited accounts. If you are credits are not good enough to meet the lender’s requirements, your offer may get rejected.

Higher interest rates
Not that great a news because commercial mortgages are less popular than their residential counterparts, you usually won’t be able to enjoy such competitive interest rates associated with a personal mortgage.

Be careful
Even if people of the UK are safeguarded by the FSA, which regulates loans and mortgage companies and assures that borrowers are dealt correctly, there is no equivalent for the commercial side of mortgages.

Author Bio:-
Matt Davis a partner at Empire commercial Finance, a firm of specialist independent Commercial Finance broker seeking to serve client of UK with Commercial Mortgages Services .

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