Who can Make Use of a Commercial Mortgage?
Who applies for a commercial mortgage? It is simple
, as the name suggests it is for commercial purpose. The type of business may be on partnership, private companies, incorporated business, pubs, restaurants, start up of any big or small enterprise. In addition to this, you may want to buy land for non residential purpose, it could be for shopping mall or for real estate purpose.
Here the collateral used as a security against the mortgage is a commercial property. You can't make use of your house to secure a loan. Besides collateral verification, lenders also check on credit worthiness of a borrower. This will assure the lender if the candidate is worth enough to lend money or is he a risky candidate. There are lot of ups and downs in managing a business and lending huge amount of money to these may involve risk. Hence, lenders make use of a collateral as a guarantee against the repayment of funds. Careful assessment of the credit report will give him
a clear picture of whether he has been a defaulter in the past, faced any bankruptcy or County Court Judgement.
Some lenders may consider a business plan as a criteria for lending money. This proposal will reflect your income and expenditure and your future plans. It helps a lender understand how successful your projections would be and is there any risk involved. This will assure him of his repayments on time. Be careful when you write a proposal to your lender, you can seek for your friend's help who has prior experience in this field.
Focus on how you would pay back and how will you spear head this business? How much are you planning to generate out of this. You must put your best foot forward and project a rosy picture of it.
A borrower has to be on time with the repayments. A commercial mortgage entails a personal obligation for the borrower and any outstanding balance is paid in full even in the case of a foreclosure. Pay your mortgages on time and do no get into further debts.
Who can Make Use of a Commercial Mortgage?
By: Kirthy Shetty
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