Guide to Calculating Interest on a Commercial Property Loan
Are you getting a good rate on your commercial property loan, or are you paying too much? To answer this question, we first need to examine how property loan interest rates are calculated in the first place. Read on to learn about three of the key factors.
A commercial property loan is, simply put, a mortgage loan on commercial real estate. As a business owner, there are some serious advantages to purchasing your property instead of leasing it. The business finance consultants at Teviston Capital Group know how to secure the best rates for financing your commercial real estate purchase, and much more.
#1: Individual vs. Entities
The rate of your commercial real estate loan will depend on whether you are applying through your business or as an individual. Typically, this is done through your business entity. The financial track record of your business, such as its credit rating, impacts the rate of your commercial business loan.
#2: The Loan Repayment Schedule
Unlike residential loans, which tend to be between 15- and 30-year long mortgages, business property loans tend to range from five years (or less) to 20 years.
#3: Loan-to-Value Ratio
For both commercial and residential loans, borrowers with lower LTVs will be able to qualify for more favorable financing rates. This is due to the fact that they have more equity (i.e., stake) in the property, meaning less risk for the lender.
The Bottom Line
Not all businesses are in good enough financial standing to purchase commercial real estate through a business loan. To learn if your business is a good candidate for a commercial real estate loan, and to learn more about the value of taking this route, contact Teviston Capital Group for a free, no obligation commercial property loan consultation.
