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corrected for commercial mortgage

A Commercial Mortgage is a loan made on real estate collateral, other than a residential property, in which a mortgage is given to secure payment of principal and interest, or just interest alone.

A commercial mortgage is similar to a residential mortgage, except the collateral is not a residence, but a commercial building or other business real estate.

Typically the mortgage is arrange by a business. Because the business may be formulated as a partnership or limited company the assessment by the lender as to the creditworthiness of the business is more complicated.

The length of the loan usually runs from 5 to 30 years.

1 Collateral
2 Why use a Commercial Mortgage
3 Interest rates
4 See also

Collateral

Examples of commercial real estate include: Shopping centers, industrial buildings, office buildings, golf courses, resorts, hotels, parking garages, car washes, retail stores.

Why use a Commercial Mortgage

Common applications of commercial mortgages include: construction of a new building, purchase of premises, expansion of facilities or modification of existing premises.

Interest rates

Interest rates are usually higher than for a mortgage over residential property.

The most common variant of commercial mortgages is a fixed rate commercial mortgage where the interest rate remains constant throughout the term. Loans can also be variable or capped.

A second commercial mortgage is an additional loan on a commercial property secured behind that of the first lien.