A property used solely for business is called commercial real estate (CRE). Any income-producing property, like retailers, malls, hotels, offices, etc comes under CRE. Securing a loan for commercial real estate is different in some aspects than getting a residential loan. Residential mortgages are typically made to individuals, while banks and independent lenders make commercial property loans available to business entities.
Difference Between CRE Loans And Residential Homes
Apart from the different kinds of borrowers, the differences in residential property loans and commercial property loans lie in the terms of the loans. Where commercial loans usually range from five to twenty years, with a balloon payment at the end of the term, home loans are an amortized loan with the most common period of time over which the installments are paid in regular intervals being thirty years.
Another major difference between the two loans is in their Loan-To-Value Ratios. Commercial loans have their LTV ratios lie in the 65-80% range, while home loans can have high LTV ratios, even up to 100%.
If you need additional space or a new location for your business, commercial loans are a way to stop paying rent and start paying towards an asset, without making any upfront payments. Here are the steps to get the best commercial real estate loans.
Steps To Secure Commercial Property Loans
To begin with, you will have to find the right lender. The best way to do so is through a platform like Refined CRE Financing, but more on that later. After you’ve chosen the lender you have to prepare the necessary documents for the application process. Let's look at it in some detail:
Find The Right Lender: The first step is arguably the most important one. Finding the right lender, one that fits your needs and goals, is crucial. You have to be very clear on your objectives for the loan to find the most suitable lender. Come with precise answers to questions like: What is my budget? What would the payment schedule look like? How are the finances of my business at the moment? And whether or not to put any collateral for the loan.
A Comparison of Lenders: You do not want to end up paying more interest because you missed out on doing proper research on lenders before you secured a loan. Do a diligent analysis of the types of loans they offer, their rates and requirements, and compare as many lenders as you can. This is where Refined CRE Financing comes in: you can access a pool of over a thousand qualified lenders on an easy-to-use platform and make this humongous task much easier for yourself.
The Application Process: Once you have chosen a lender, and they have ascertained that you qualify for a loan, they will walk you through the application process. The details and documentation needed in the application process depends on the lender you choose. Typically, banks take longer to process documentation than private lenders.
The commercial real estate mortgage process can be complicated. Fortunately, Refined CRE Financing has streamlined it by creating a pool of over a thousand qualified lenders, removing pointless steps, and keeping everything in one convenient place. Check out our website for more information.
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