Understanding Your Commercial Mortgage Better
A commercial mortgage is a great option for business leaders to satisfy the needs of a growing business needs. It can also help to reduce operational costs for startups or streamline the accounts of a stable business. There are a few useful aspects of a commercial mortgage that you will find very useful.
The interest rate can be determined by how healthy your business is and how good your business idea is
When lenders offer personal mortgage, the assessments are based on the past and present of the borrower. But in case of a business leader being offered a commercial mortgage, the assessments are largely based on the future of the business as well. These assessments are quite similar to the assessments made by a potential investor. The main points of consideration are the potential of the business to earn profits in the future. While it is true that the past finances and healthy credit history do play an important role, the future prospects are also weighed heavily. The lender may assess how sound the business idea is. The health of the market in which the business operates is also taken into account. The corporate structure, business plan and growth strategy are assessed to check how feasible and practical they are. The adherence to ethical practices, existing lawsuits and exposure to potential future lawsuits is also taken into account. Any other liabilities are also considered. Considering all these factors, the ability of repayment may be deemed to be much higher than what can be determined by merely looking at the credit history.
Re-mortgaging can open up lucrative opportunities
If the business currently has a commercial property and has no plans for expansion, taking a mortgage on existing property can also present some useful opportunities. If there are already existing mortgages, then refinancing may allow you to take advantage of reduced interest rates or more favourable terms. If you have multiple small loans for other business purposes, possibly at a higher interest, you can consolidate and save money on the additional interest. You will also have much simpler accounts, with just one instalment payment.