You’ll need to work with a commercial mortgage broker when you’re looking to get commercial mortgages. It’s important to understand the differences between commercial products and residential ones. Here’s a brief rundown.
These loans have different purposes. As the name suggests, commercial mortgages are used for buying business structures like retail spaces, warehouses, and office buildings, to name just a few. Residential mortgages are used to buy personal properties like houses and condos.
One of the other big differences is commercial mortgages have higher interest rates. There are several reasons for this, including commercial properties being affected by unpredictable market conditions that increase default risk.
Commercial Mortgages Have Shorter Terms
The commercial variety has shorter terms and can often include balloon payments. Lenders choose to examine their risk frequently. Businesses can refinance with shorter terms as market conditions change and they adapt to new opportunities.
One of the other advantages to a shorter term is these often end with a balloon payment. That way lenders can recover their principal earlier than with a residential mortgage and offer lower initial payments to businesses.
These Mortgages Require More Collateral Than Their Residential Cousins
These mortgages also require more collateral, partially because the assets depreciate faster. Some commercial properties are harder to resell, and that’s another reason that lenders look for diversified collateral. These types include offices and warehouses, which can include things like receivables, inventory, and even machinery.
OMJ Mortgage Capital is ready to help with your commercial mortgages. We have a good track record of funding billions of dollars in loans. Our company takes pride in its reputation, and we work with both financial institutions and alternative lenders
