There are various factors that will determine whether or not you will be approved for a commercial mortgage loan. These types of loans entail somewhat demanding requirements from the borrower.
If you are in dire need of a commercial mortgage loan, take the following advices to jump start your project or business.
- Establish a strong relationship with a reputable local banker. If you have done this in the past, then you have accomplished an important part in your desire to have a business loan. A certified businessman always anticipates that sometime in the near future, he will need the help of a financial person. Loans are not only debts. That is a misconception that is very impractical. Today, loans are used even by multinational companies primarily because it is more practical to invest on them than to dole out huge cash immediately. Thus, you need to consult with a banker in terms of the timing and the best loan type you can apply based on your needs.
- Scout for ideal real estate to buy. Not all real estates can bring your return of investment. Sometimes, when you invest on wrong properties, it can lead to huge loss of money and eventually, bankruptcy, if not handled properly. There are different types of real estate which can be categorized as prime or subprime. Prime real estate is situated in commercial centers where the traffic is congested. A populated area means more sales opportunities. Subprime real estate is mostly located in rural-urban areas where the place is not overpopulated.
- Find a mortgage lender. When we say find a mortgage lender, consider also your capability to adhere to that lender’s requirements and interest rates. There are terms and conditions that can easily be settled but the interest rates, more often than not, are what make the payment difficult. Always compare rates to get the most reasonable deal in the market.
- Initiate the offer on your property. Make the first offer and make it attractive. The reason why you’re buying property is because you have a need to satisfy. When you place an offer, consider the current trends in the market and deal with the prospects as friendly as you can.
- Keep on updating. Once you have made your deal on the mortgage, always post an update to the lender and the prospect seller. This way, you are keeping them informed that you are serious about your offer and you definitely can make any adjustments depending on the agreement you and the other party can make.
Factors That Determine Commercial Mortgage Loan Approval
Although applying for a commercial mortgage is easy, the approval part is the tough one. You can submit complete documents and have satisfactory credit report rating, but this does not always guarantee that you can obtain an approval for your application. Other factors affecting your application would be the consistency of your business’ income, track records (if your business existed in the past), your development plan and design if the loan is intended for a particular project. If you are putting up a project for community work and other charitable institutions where you cannot get a return of investment, you might be exempted from business taxes.