Anyone owning a small or big business will need a commercial real estate loan. It can act as a great push for your business. The commercial real estate loans aren’t like your general residential ones and very much different. Before applying for the commercial real estate loan, you should make sure to know what it is.
What is a commercial real estate loan?
When you proceed to purchase a property, usually you take a loan. Just like the residential loans, commercial real estate property loans are also given by the banks and other lenders. Usually, the commercial real estate loan lenders need to verify that the property is owned by the one who is borrowing the money.
The commercial real estate loans usually vary depending on the type of property you are taking the loan for. Based on that, the terms and rates would vary too. The down payment range can vary from 10-50%. Thus, make sure to know about your property and then apply for the loan.
What are the types of commercial real estate loans?
Some of the prominent types of commercial real estate loans according to Forum include the following
Traditional commercial mortgage loans
The commercial real estate loans are given for different properties such as office buildings, retail center, and more. However, to get such loan approved, the owner will need to occupy the property, at least 51% of it. The property will act as security for the loan.
The term and condition for taking the loan usually varies from lender to lender. Thus, you should prefer keeping a check with it. Some of the banks may offer loan up to 25 years, while some may provide only for ten years.
Commercial Bridge Loans
In this kind of commercial loans, the gap between finance and security is often bridged. Most of the long-term loans come with the option of a bridge loan. However, some may be short-term as well, extending from 6 months to two years. But in that case, the rate of loans will vary significantly.
Soft and Hard money loans
Hard money loans are very much similar to bridge loans. Private companies with higher down payment usually take such loans. Hard money loans are usually short-termed with high-interest rates.
Soft money loans are a combination of traditional and hard money. Soft money lenders will check your credit thoroughly before providing you the loan. They usually come with low down payment and interest. You can easily shut off the soft money loans.
You should check the market thoroughly to find out the potential loan option for yourself. Nonetheless, it is extremely necessary to consult with experts regarding which loan would be the best for you.