If you’re new to commercial real estate financing, you’ll want to get a firm understanding of the differences between a residential and a commercial mortgage loan.  Residential real estate uses a debt-to-income formula for judging your ability to repay a loan while commercial real estate is based on the debt coverage service ratio formula to qualify.  This means that to qualify for a commercial loan, you’ll have to know what your projected return on investment (ROI) will be when making a commercial property purchase or refinance.

The cash flow generated from your commercial real estate property will be one of the factors in determining both the value of the property as well as its future return.  The type and amount of your commercial loan is also dependent on other factors, including your business and personal credit history, your net worth or financial strength, the type of property and its overall condition, its cash flow, the geographical location of the property, and the general economic outlook of the local market.

The first step to purchasing or refinancing your commercial property is to know exactly how you’ll use the property.  What type of property will you acquire?  How will the property be used to improve your cash flow and financial goals?  How long will you hold the property?  Will you be an owner/tenant or just an investor?  And do you have an exit strategy?  These are all questions you’ll want to think about before applying for your commercial financing.

After you’ve established the market need and use for the property, you’ll also want to analyze its current and future cash flow that will contribute to your ROI.  So give us a call today, and we’ll help you get started and answer any other questions you may have.

Commercial Mortgage Products

Since 1995 Capital Lending Corp. has been providing solutions to borrowers looking for better options for their commercial financing needs. Throughout the years we have built an impressive portfolio of financing programs to address the diverse circumstances of our clients. We understand the complexity of finding the right commercial loan to match the needs and goals of our customers and are ready to earn your business. Following please find a short list of some of the many commercial loan programs available:

• Loans for land acquisition, construction and development of apartment buildings, mix use properties, nursing homes and assisted living facilities providing construction to permanent financing up to 90% of the total cost of the project. These loans are assumable and non recourse.
• Programs for owner occupied mix use and commercial properties financing up to 90% of the value of the property.
• Multi-family programs providing permanent financing up to 80% of the value of the property at competitive rates.
• Programs for "Hard To Finance" Properties including churches, gas stations, golf courses, hotels, motels, restaurants, retail stores, industrial buildings, marinas, offices, shopping centers, vacant properties, etc…
• Loans with No Personal Income and/or Asset Verification.
• Loans with Low Fixed Rates with up to 40 year Full Amortizations.
• Bridge Loans
• Mezzanine Financing
• Loans for Borrowers with Credit Problems.
• Commercial Financing for Domestic and International Projects

Determining Your Commercial Mortgage Interest Rate

Understandably, one of the first questions we’re asked from potential commercial borrowers is “What will my interest rate be?” But the final interest rate on your new loan will be based on your past credit history, the loan-to-value (LTV) of the property, and other risk components associated with the deal. And before we can provide a valid financial quote we’ll need to work together to build a suitable package acceptable to an underwriter. The final rates and terms you receive will be based largely on your qualifications and the characteristics of your commercial property.

In addition to interest rates there are other factors you should consider if your goal is to obtain the best overall financial package and return on your property as an investment. For example, the terms of a mortgage loan can be just as important as the interest rate. Most commercial loans have prepayment penalties. Any pre-payment penalties could also affect the overall cost of your mortgage should you wish to sell or refinance the property. So it’s wise to carefully review the covenants that the lender required on the loan.

Now that you understand how commercial rates differ from residential rates, this is the perfect time to contact us to get started on putting together your transaction.