Making the right the choice on whether to go for mortgage or not can be a task that is both intimating and daunting simply because the borrower has to decide from a number of options. Banks and all the lending institution present their mortgages as the best. They entice and attract potential borrowers by all means. Many are attempted to go for the loans without having any information about them. The overwhelming fact is that the mortgaging companies have flooded the market and it has become easy to process and acquire loans.
However, to be realistic these companies may not be as good as they claim to be. The difference and disparity can clearly be understood from the terms and conditions of each of the lending institutions and it is advisable to have an expert to offer the necessary assistance. The terms for the residential mortgages have variations depending on the various lenders.
Some of the most crucial factors that must be observed include the interest rate and the flexibility in the payment structure. Therefore, the choice should be based on the terms that best suits the interest of the borrower. The key point in this is by reviewing everything keenly so as to learn about the implication of a mortgage into your financial system or business and income.
Most businesses fall under corporate form of ownership, but a guarantee from the key business owners is very essential when processing either a commercial mortgage loan. In order to qualify, the financial and credit scores must be approved by the lending institution. Evaluation of the business is only used to assess and ascertain the borrower’s ability to repay the loan. Eligible applicants must also have guarantor in addition to the security for the loan.
Amount of Loan-the total amount of the commercial mortgage or loan typically will depend on the ratios of loan to value and debt service coverage. At the same time the loan is awarded depending on the amount you are capable of paying as monthly instalments.
Interest rate-the rate can either be a fixed rate or a floating rate. Fixed interest rates do not fluctuate or vary for the entire life of the loan irrespective of the market conditions. This implies that you can be sure the monthly payment for the loan will ever remain constant until it is fully settled. There is also a variable interest rate changes and fluctuate with variation in the marketing conditions meaning that the monthly payments for the loan varies from time to time.
Fees-most of the best mortgage lenders always have the need application fee also referred to as a good faith deposit. This fee is utilized by the lenders in covering all the expenses associated with underwriting; for example property appraisal. Additionally, the loans may also include origination fees as well as exit fees. The exit fees is normally paid when the loan has been fully settled.
Term-the term of a commercial mortgage usually goes for a duration of about five to ten years especially for stabilized commercial properties with established income and cash flows. It is usually referred to as permanent loan. Another term for this kind of loan is of about one to three years for transitional properties; for instance, a newly established property or those undergoing renovated, upgrading or expansion. It is known as bridge loan. Commercial mortgages also have longer terms going up to twenty five years and over. This is special for the loans offered for properties either sponsored or owned by the government.
A term can be extended on the condition that the borrower pays an extension fee. In case the loan is not fully settled by the anticipated repayment date, it is considered a default loan and the penalties apply.
Repayment-the prepayment terms for the commercial mortgage loans usually vary depending on whether the borrower is permitted to refinance the loan at will or not. Some mortgagees such as insurance companies, microfinance and banks offer flexible repayment options of such loans. There are situations when one processes a personal loan in order to repay a mortgage. However, the borrower is expected to observe all the terms and settle the debt without any failure to avoid the penalties.