For many looking to startup their own business they don’t realize that they may need a commercial mortgage at some point. Now, most don’t really know too much about mortgages in general and there is a misconception that a regular housing mortgage or loan will be sufficient to buy commercial property. That isn’t the case as commercial and residential mortgages are two very different things. So, what is a commercial mortgage? Learn more from http://www.jacobsenliving.com/commercial-mortgage-calculators/
Purchasing a Retail Space
Mortgages for commercial property are very much like a residential mortgage with the exception that the commercial mortgages are aimed to buy commercial buildings. For instance, a buyer could look into purchasing a retail space such as a mall or unit to setup a physical storefront. Lenders can often find these to be more versatile than some of the residential mortgages as there are always new businesses starting. The mortgages are aimed at business people who want to purchase a store. It’s very similar to that of a commercial loan; the loan is specifically for the business and business use rather than personal use.
How Can A Mortgage Be Used?
There are a number of properties in which can be converted from a residential building to a commercial building; change of use is frequent in today’s vastly changing market. However, a commercial mortgage can be used to setup a retail store or a factory, or even a restaurant or hotel. There are a number of businesses that can be setup and used for commercial mortgages. For some, they can buy property and obtain a mortgage at the same time in order to create their startup point for their business. This isn’t out of the question and it’s maybe a sensible option for those who want to at some point purchase both.
Buy-To-Lets Are a Form of a Commercial Mortgage
However, commercial mortgages can also be used to purchase residential buildings in order to rent out to others. For instance, a property developer or investor can purchase an apartment for one hundred thousand dollars and opt for a buy-to-let commercial loan or mortgage. When the mortgage is active, they don’t move into the property but rather seek out tenants and use this as an investment in their housing portfolio. These types of mortgages are vastly popular and despite what many think, they are commercial mortgages as it’s a business use rather than singular use. If the person bought the apartment and planned to live in it then it would be a regular residential mortgage loan they’d need. Visit us now!
Isn’t Renting Better Than Buying Outright?
To be honest this is a hard one to answer. There are going to be many businesses who find renting their space to be more cost-effective depending on how much money they make per month and how much their overheads are also. If a business is just starting out and isn’t too sure about the economy or the real estate market as a whole, they could opt to rent. However, purchasing a commercial mortgage can also be a great idea. If the finances stretch then when all monies are paid back the property becomes yours so that’s great too. It just depends on what you specifically need and not just now, but also in the future.
Understand what’s involved Before Deciding
It doesn’t matter if you have a great business idea or believe your restaurant could be what your town needs, mortgages and loans are difficult financial tools to work with. You don’t know if the market is going to be good or not and that’s why you have to think very carefully about this decision. A commercial loan and commercial mortgage can be very important, but only when they work for your business and your finances.