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Commercial Mortgages - How and Why they are different
January 21, 2015 @ 1:52 PM by: Don Blair

Commercial mortgages are totally different

Every commercial mortgage is different. And some are more different than others. Here at MortgageTech, we have the expertise to review your lending needs and then to work with you in the sourcing of funding for the building that you are buying.

We have a long history of arranging commercial mortgages for buildings valued from $250,000 and upwards. As a matter of fact, our most senior mortgage specialist has over 30 years of experience with commercial mortgages! While a majority of our mortgages are arranged through a wide range of lending institutions, we also arrange a significant number of mortgages through our network of private lenders.

In general, the private lenders are slightly easier to deal with, and will usually lend slightly more money than the institutions. For example, institutions tend to be willing to lend about 65% of the purchase price. Our private lenders tend to lend to 75%.

If you are new to the commercial borrowing field, please be aware that commercial lending takes longer to do and usually requires additional reports, when compared to a residential mortgage. For example, most commercial mortgages require a Phase 1 Environmental report and an Appraisal. It is not unusual to take 45 – 60 days to complete the financing on a complicated commercial purchase.

Due to the complexity of the commercial lending environment, please call to discuss your specific situation with us. When you call, you are likely to be asked to provide at least the following information:
1. Details of the Purchase Agreement concerning the new building
2. Copy of any leases.
3. Background information on the purchasing company/person
4. Two years of financial statements on the purchasing company
5. Confirmation of where the down payment is coming from
6. A picture of the building in question

The closing costs associated with buying a commercial building can be significant. You will normally need two lawyers, an appraisal, a mortgage broker, a Phase 1 Environmental Report and maybe a Building Report. Depending on the size of the purchase, you should plan on incurring costs of $10,000 - $15,000, or more. Whoever the lender is, they will incorporate these costs into their evaluation of the viability of your project. It’s better for you to understand, up front, how a bank is going to look at your application.

Call us for some guidance when you are pulling your budget together.