Benefit From Low Commercial Real Estate Loan Rates

The current market real estate trends suggest a great time to make an investment in the real estate industry. Not every one of us possesses the money and resources required to make such an investment. So the best option in such a scenario is to get a commercial real estate loan as they are available at pretty low rates these days. There are numerous lenders who are willing to provide commercial real estate loans to different borrowers interested in making different types of real estate investments. An overview of how you might be able to benefit from the lowest possible commercial real estate loan rates is given below for your convenience.

How does it work?

Unlike majority of the business loans, commercial real estate loans are usually provided against commercial property which is collateralized by the provider. Therefore, the rates charged by these loans are much lower in comparison to other loan types. There are four major factors that usually affect real estate loan rates:

  • Business and borrower’s creditworthiness
  • Secured commercial real estate loan type
  • Loan’s term and size
  • Current market rates

Majority of the lenders normally provide commercial real estate loans with variable and fixed rates. The interest does not change in case of fixed rate loans while it may change at the run time in case of variable real estate loans. Majority of the borrowers usually do not qualify for securing fixed rate loans.

Summary of real estate loan rates (Dec, 2017)

A summary of some of the most common types of real estate loans and their associated loan rates is given below.

  • 5% to 6.75% for SBA 7A Loan
  • 5% to 6% for SBA 504 Loan
  • 5% to 7% for conventional bank loans
  • 8% to 12% for online marketplace loans
  • 10% to 18% for hard money loans

The above mentioned loan rates do not usually undergo any major changes over 2 to 3 years but they may experience a notable variation if you are dealing with a 10 to 20 years commitment.