There are
several
considerations
that should
be made
before you
decide that
you are
a good candidate
for a commercial
mortgage.
Below are
some factors
that you
should examine
before contacting
mortgage
lenders.
Am I financially
prepared?
The most
important
question
that you
need to
ask yourself
is if you
have enough
money in
order to
get started.
Although
mortgages
are utilized
in situations
where you
don't have
enough cash
to make
a purchase
outright,
you still
must have
enough money
in order
to make
a down payment
on the loan.
Typically,
commercial
lenders
will require
anywhere
from 10-30
percent
of the mortgage
as a down
payment.
Be careful
- lower
down payments
generally
mean higher
interest
rates. Just
because
you have
sufficient
funds to
make a down
payment
does not
mean that
you are
financially
prepared
to take
on a mortgage.
Lenders
will typically
examine
your cash
flow in
order to
determine
if you will
be able
to make
your scheduled
payments.
How Risky
is my Venture?
Another
question
you will
need to
ask yourself
regards
how risky
your business
venture
is. Typically,
office complexes
and multi-family
buildings
are seen
as "safe" investments,
while ventures
that depend
more on
location
and surrounding
area (like
a restaurant)
are considered
"risky." If your
business
is classified
as "risky" you might
be asked
to provide
a history
of success
with a similar
business.
You might
also be
subject
to paying
for research
that the
mortgage
lender will
do about
the surrounding
area in
order to
decide how
likely the
business
is to succeed.
Finally,
if your
business
is marked
as "risky," interest
rates will
almost surely
be higher.
How Long
of a Mortgage
Will I Need?
Finally,
you have
determined
that you
have the
sufficient
funds and
are prepared
to take
on a mortgage!
You now
will have
to decide
how long
of a mortgage
you think
you will
need. Longer
mortgages
have lower
monthly
payments,
but you
will end
up having
to pay more
in interest.