Commercial Real Estate Loans
Buying real estate usually requires a significant financial investment, and this is even more true with commercial properties. For most uses, a residential mortgage cannot be used to pay for a building in which you plan to conduct business. For businesses, commercial real estate loans operate as an entirely separate subset of options. The good news is that for your commercial needs, these loans often provide unique advantages. If you’re considering what kind of commercial loan is right for you, here’s what you need to know.
Real estate can vary significantly, even between two buildings next to each other. That’s why there are different types of commercial real estate loans available: If you plan to also occupy the property that you are buying for the purpose of doing business, there is a type of loan specifically for you. If minimizing your equity investment is a priority, Woodsboro Bank can partner with the Small Business Administration (SBA) to assist with these types of loans, and you can generally find both fixed and variable options. Looking to invest in the local community with an income producing property? Woodsboro Bank has a long history of providing a wide variety of investment real estate lending solutions. Whether its multifamily, retail or warehouse, our commercial bankers have a wealth of experience in providing customized solutions and guiding investors through the process. You need look no further for the right loan solutions and servicing.
Types Of Commercial Real Estate Loans
Owner Occupied Loans
Investment Loans
Buying a piece of commercial property is functionally different from purchasing a residential home. There are different processes, and the loans that you take out for each are substantively different. Residential loans are made for individuals, but in order to secure a commercial loan, you will need to be a business entity. This does not necessarily need to be a business itself; you could also be a developer, trust, or fund. Amortization is the process of determining the ratio of how much interest and principal are paid with each payment so that payments stay the same. In residential mortgages, amortization aligns with the payoff timeline in which you will gradually pay more in principal and less in interest over time. With a commercial loan, the amortization often stretches beyond the term. The LTV, or loan to value ratio, is a calculation of how much a property is worth versus how much the loan amount is. A commercial loan usually does not exceed about 80%, whereas a residential mortgage, in some cases, can have an LTV of up to 100%.
How Is A Commercial Real Estate Loan Different From A Residential Home Mortgage?
Borrower Qualifications
Amortization Schedule
Loan To Value Ratios
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