Commercial Mortgage Loans
The difference between commercial mortgage loans and residential mortgages is in the purpose of the building.
A residential mortgage loan is for a residential building - typically a single family home, but can be a multi family usually up to 4 units.
A residential mortgage loan is rather straight forward with standard forms and procedures. You will usually need to have your employment verified, a fairly good credit rating and provide documentation explaining your bank account and credit card activity for several months back. Typically a down payment is required and you can get several different types of loans. Check our mortgages section to see how to get free mortgage quotes from online lenders.
Commercial mortgage loans are usually for a much larger amount than a residential mortgage loan. The types of property that need this type of mortgage include any commercial building that will house warehouse facilities, stores, offices, restaurants plus any large apartment buildings (typically buildings that have more than 4 apartments.
All mortgage lenders want the lendee to have equity in the property. This is sometimes referred to as the loan to value ratio. The equity is in the form of a cash down payment at the time of the loan. In commercial mortgage loans, it is pretty standard to expect to put down 20%. Residential mortgage loans are a bit more lenient and the norm is 10%, although anything less than 20% will cost you a little extra per month - this is called private mortgage insurance or PMI.
When applying for commercial mortgage loans, be prepared to supply lots of paperwork! The verification requirements are a bit more strict than with residential mortgages. Of course, every bank is different, but typically you will need 3 years of tax returns, financial statements and current income the property generates including copies of leases. Check our online lenders to apply for a commercial loan online.