Commercial Mortgage

A commercial mortgage is a loan secured by commercial property, such as office buildings, shopping centres, industrial warehouses, or apartments, used primarily for business purposes, with repayment terms typically ranging from 5 to 20 years.

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What is a Commercial Mortgage?

A commercial mortgage is a type of loan specifically designed for businesses and investors to purchase, develop, or refinance commercial properties. Unlike residential mortgages, which are taken out by individuals for homes, commercial mortgages are secured against real estate intended for business use, such as office spaces, retail locations, warehouses, and multifamily rental buildings. The terms, rates, and qualifications for these loans can vary significantly based on the lender, the property, and the creditworthiness of the borrower, with repayment periods generally extending up to 20 or 30 years.

EXAMPLE OF A COMMERCIAL MORTGAGE

BACKGROUND

A South-West based business wanted to acquire an industrial property to house their growing manufacturing business. The property, located in an industrial park, offers the necessary space for production lines, warehousing, and offices, aligning perfectly with the business operational needs and future growth plans.

CHALLENGE

Despite having a solid business plan and some capital, the entrepreneur faced the hurdle of the significant upfront investment required for such a property. The purchase price and associated renovation costs for customising the space to meet specific manufacturing needs exceed their available resources, creating a financial bottleneck.

SOLUTION

A commercial mortgage tailored to light industrial properties was sought for the business allowing them to purchase the property and continue growing the business to success.