Special types of loans facilitated on properties not used for residential purposes may be referred to as commercial mortgages. Depending on the type of premises, each loan is assessed on an individual basis and its price is also determined in accordance with the level of risk involved in it. These mortgages are beyond the business loans. Those needing such loans may approach the bankers, money lenders directly or through the mortgage brokers that act as bridges between the two.
Availing the loan – Moneylenders and bankers usually ask the borrowers to keep the properties as securities against these types of loans. Usually, seventy percent of the property value is evaluated for security purposes. Additional securities in the form of other properties or equivalent equities may be considered if the major property is not sufficient for meeting the security purpose. Leasehold properties could also be mortgaged provided its lease remains seventy years or more.
Time periods – Moneylenders and bankers generally allow commercial loans for a period of three to twenty-five years. Bridging loans for shorter periods may also be allowed for the development of properties that may be allowed for few weeks or up to a period of twenty-four months. Fixed rate mortgages are also facilitated. Personal loans may be allowed on predetermined rates but it is not so in the case of commercial loans. Risk level is thoroughly studied before allowing the commercial loans to the needy guys. The moneylender or the banks would ask lots of questions from the borrowers and the rate of interest may also depend upon the relevant facts. Borrowers asking for larger loans may find the best deals as regards the interest rate while the guys availing fewer amounts of loans may have to pay higher interest.
Quantum of loan and fees – Borrowers availing loans against owner-occupied properties may be allowed the same to the tune of seventy to seventy-five percent of their values. Those asking loans against the properties meant for rental income may be permitted to raise the loans approx equivalent to the said income but it will not go beyond the purchase price of more than sixty-five percent. The quantum of a loan may go down further if it is for owning a business that includes stock or goodwill etc.
Some sort of arrangement, valuation or legal fees is also applicable as regards commercial mortgages. Do check everything in detail before signing the contract.