Finding the Best Commercial Mortgages

A commercial mortgage is the term used to describe a mortgage on a business property. For many small businesses, renting a property is the better option, but for established businesses that are secure enough to know they are going to be around for years to come, purchasing a business property is a great investment. The best tools to help ensure you find the best commercial mortgage loan options are: an attorney, an accountant, and a broker. These professionals will help you determine where the best choices are.

Choose the Loan Type Right for Your Business

There are four main options available here:

Fixed Rate: This interest rate stays the same for the entire length of the loan. This is best for those who do not want or need to take risk and want to budget their payments.

Variable Rate: This interest rate stays the same for the first few years of the  loan, and then fluctuates based on a variety of factors. For anyone who cannot pay their loan down dramatically or completely within the first few years, this could be a risky move because it will be hard to budget the payment.

Interest Only: This pays only the interest on the loan, and nothing toward the principle. This could increase the length of time and money spent paying off the loan, but keeps the payments low.

Balloon Payments: This kind of loan is short term, 5 to 15 years, with a large balloon payment at the end. This could be risky for those who predict heavy growth that they don't experience. The loan can be refinanced, though.

Consider More than the Interest Rate

While some may believe that the lowest interest provides the best mortgage, this is not the the case. You will need to take a close look at the loan terms to determine if they mesh will with your overall business goals and objectives. Don't be afraid to ask questions of the lender, and make sure you have your lawyer on hand to help you sort out details.

Other Tips

Shop around. Just because a lender tells you they will give you the best deal in town doesn't mean that they will. Make sure you take your time and don't jump at the first offer. Have a thorough business plan that includes information on the business, what it does, why it needs the money and what will happen to the funds if granted. This way the lender knows you're serious. Also include financial information and supporting documents, along with projections for the repayment of the loan.

While your attorney, broker, and accountant are there to help you and offer their thoughts, they don't run your business. The best deal for you may not be the best deal for another business owner, and only you can decide what they best deal is.