A commercial mortgage in Chicago Illinois is a loan made using commercial real estate as collateral to secure repayment. A commercial mortgage is similar to a residential mortgage, except the collateral is a commercial building or other business real estate, not residential property. In addition, commercial mortgages are typically taken on by businesses instead of individual borrowers. Some commercial mortgages are nonrecourse, that is, that in the event of default in repayment, the creditor can only seize the collateral, but has no further claim against the borrower for any remaining deficiency.
The majority of commercial mortgages in the united states, while requiring the borrower to simply make a monthly payment small enough to pay off the loan over a 20 to 30 year time frame, require a balloon payment (a total payoff) after a lesser time frame. Thus there are two elements generally to the term of a commercial mortgage loan: the length of time allowed until balloon payment (known simply as the term), and the amortization. Common applications of commercial mortgage loans include acquiring land or commercial properties, expanding existing facilities or refinancing existing debt.
Commercial mortgage loans are almost always designed to be underwritten based entirely on the attributes of the property being mortgaged, as opposed to the credit attributes of the borrower. The most common commercial mortgage is a fixed-rate loan, where the interest rate remains constant throughout the term. A second commercial mortgage is an additional loan on a commercial property secured behind that of the first lien.
Commercial mortgages tend to be individually priced so the broker’s ability to negotiate a rate on your behalf with the mortgage lender really benefits you. If you are looking for the best buy to let mortgage or commercial mortgage deals and interest rates then talk to us.