Commercial Mortgages

Hot Topics

What Happens If Interest Rates Change?
If you have some form of fixed interest rate mortgage you will be unaffected by changes in interest rates. Otherwise you can expect a change in the rate of interest charged on your mortgage.
Where Can I Buy a Mortgage?
Many, but not all financial services companies offer mortgages. If you are looking for a mortgage the traditional approach is to speak to you bank or a building society. However, you are most likely to find the cheapest deals by speaking to a Mortgage Broker.
What Are Redemption Penalties?
Redemption penalties are your lender’s way of getting extra money out of you when you decide to cancel your mortgage agreement early.
What Are Flexible Mortgages?
Generally, people rebroke their mortgage deal once every five or six years. They also may change their mortgage lender at the end of a discounted or fixed period. Chances are in that in the time between their last remortgage, the mortgage market will have changed a great deal.
I Have Been Turned Down For A Loan Or Credit Card, Will I Still Be Able To Get A Mortgage?
If you have been turned down for a credit card or loan, then you need to find out why your application was rejected before you apply for a mortgage.

A commercial mortgage is probably the best way to finance the purchase of buildings and land for business purposes, it provides the most flexible and affordable finance solution. Commercial mortgages are specialized due to the fact that the lender has a legal claim over the property until the loan has been repaid in full.

Remember when arranging a mortgage; always consider its effects on your cash flow and assets. This section will give you a general overview about Commercial Mortgages but it doesn’t replace professional advice in any way. You should always consult your accounting and financial advisors before finalising a loan to get the maximum benefits and avoid any complications.

Advantages and Disadvantages of Commercial Mortgages

Advantages:

  • Retain Ownership: Instead of raising funds by selling a share in the property or the business to an investor, you retain complete ownership. The lender is only entitled to an interest return on its mortgage, not a percentage of ownership that an investor would expect. Also they can only exercise the right if you default on payment. You retain all the benefits of ownership in an asset that has the potential to increase in value.
  • Tax advantage: Interest payments on your mortgage are tax deductible and are made with pre-tax money.
  • Better Cash Flow: A mortgage gives you access to capital that you would not normally have axes to with minimal up-front payments and the flexibility to design a repayment plan that suits your needs.
  • Simplified cash flow management: Mortgage schedules are at preset, making cash management more predictable.

Disadvantages:

  • Collateral: The nature of a mortgage requires you to pledge the purchased property to the lender. If you default on the mortgage, the lender is able to foreclose the property and sell it to repay the outstanding money owed to the lender. Make sure when the mortgage is repaid; the lender is obligated to release the mortgage and is required to make available any government files acknowledging this release.
  • Defaults: The lender may define a variety of events that will constitute a default on the mortgage, including failure to make any payment on time, bankruptcy, insolvency and breaches of any obligations in the mortgage agreement. Try to negotiate an advanced written notice of any alleged default, with a reasonable amount of time to cure the default.

 

 



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