Tips For Getting Best Commercial Mortgage Terms

Commercial mortgages are often used for buying or refinancing property or land for commercial real estate. You borrow the loan against your property. Commercial mortgages can extend finance in ways such as developing owner-occupied ventures, purchasing business premises and securing land development business. It’s wise to know the tricks of getting the best terms if you plan on applying for a commercial mortgage loan. You can use these suggestions to get favorable commercial mortgage terms.

Get Your House in Order

It’s wise to have all the documents and other requirements when applying for a commercial property loan. Usually, lenders may ask for your most recent bank statements, copies of sales agreements, financials, lease copies, tax returns and rental schedules. It’s good that you make sure that all the requirements are in excellent condition. Doing so can increase your chances of getting the right mortgage amount and low-interest rates.

Estimated Value of Your Properties

It can be professional to present the actual value of your property to lenders. Commercial properties are often valued on comparison or capitalization basis. You can consult an expert in commercial real estate to assist in evaluating your property so that you get favorable mortgage terms.

Have a Property Strategy

Lenders usually want to understand your property strategy before approving a commercial mortgage. A lender may want to know why you want the mortgage and how it will increase your property value or increase your income. It’s wise to present your property strategy when discussing your mortgage to get the best terms on the commercial loan.

Detailed and Updated Tenancy Program

It’s wise to have a comprehensive and up-to-date tenancy program when applying for a commercial loan. Consider including rental amount, lease commencement date, lease option terms, the rate per square meter and lease expiry date on the tenancy schedule. Rental schedules often vary based on property types such as net, gross and turnover rents.

Detailed asset and Liability Statement

Presenting a comprehensive asset and liability statement can help a lender to understand the financial position of your real estate property; thus, determining loan suitability. Consider including your name, the estimated value of the real estate property, loan secured against the asset and net income on your asset and liability statement.

Prepare Property Cash Flow

Preparing a two or three-year cash flow for the commercial real estate property can tell a lot about your property. The cash flow can be instrumental in assisting a lender in understanding the future view of the property. It can also indicate how you view issues like tenancy vacancies.

You can significantly benefit from a commercial mortgage. You can talk to a mortgage broker for insights. It’s wise to take time before presenting your mortgage application.

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