Commercial Mortgages
Commercial real estate mortgages are used in two situations: expanding a business or, commonly, refinancing a debt.
Commercial mortgages use real estate as collateral to guarantee repayment of a loan. This type of mortgage is nonrecourse. Namely, the lender (creditor) can obtain the collateral from the buyer in case of a default but has no claim against any other business assets. The most typical mortgage is a fixed-rate loan, one with a steady interest rate. Generally speaking, commercial mortgages require a payment over 30 years. However, quite often, these mortgages require a "balloon payment" (complete repayment) earlier. At this point in time, the borrower is likely to refinance the loan. A commercial mortgage loan, thus, encompasses the duration until complete payoff, and the amortization.