Types of commercial Mortgages – commercial or industrial mortgages can help people finance their new commercial properties, carry out expansion on existing premises and even consolidate business debt. Interests’ rates have of late hit near lows, and it therefore makes every sense to consider commercial mortgages(Independent agent).
Once you have settled on the type of property you want to finance and secure funding, it is critical to make an informed decision on the type of commercial company that will be best for your company. Sherwood Mortgage Group’ mortgage brokers Toronto in Ontario, ON Here are the different types of commercial mortgages for your consideration.
Fixed-Rate Amortized Commercial Mortgages – these are mortgages that have a constant interest rates and same monthly payments. For those seeking to lock in low interest rates, then this is the best option for them.
Fixed-rate amortized commercial mortgages usually have a higher percentage of the monthly payment going towards interests at the start. With this type of mortgage, a larger portion goes to the principal while the ratio is reversed the more you get closer to paying of the loan.
Variable Rate Amortized Commercial Mortgages – here, there is fluctuation in the interest rate. These are great mortgages when there are low interest rates and which could go even lower. On the down side though, an increase in the rates will mean that there will be less monthly payments going towards the principal. This also means that there will be an extension to the authorization period.
Variable Rate Amortized Commercial Mortgages usually save a lot of money when you forecast that there the interest rates will be low for a long period of time.
Interest Only Commercial Mortgages – this very great option for those businesses with little capital and or want their payment to remain as low as they can be in the beginning. The main reason behind this is that the only payment made is the interest portion of the loan. This therefore implies that there is no money paid towards the principal loan amount.
Theoretically, it is impossible to pay off a loan by making interest only payments. But with Interest Only Commercial Mortgages, there is a set period of time that the “interest only” portion will last. After this set period elapses, you will have to start paying both the principal and interest.
This blended payment compared to just paying the interest, will be considerably higher.
Commercial Balloon Mortgages – these are loans where borrowers make small, regular payments that go towards the principal and interest. By the end of amortization period, (which mostly is between 5-10 years) the loan’s balance is usually due in a lump sum.
At the end of the amortization period, (usually 5-10 years) the remainder of the loan is usually due in a lump sum.