Can you get a mortgage on a commercial property?

When you purchase a home, a mortgage is pretty standard. Commercial properties are a bit different, and it leads many to wonder how the process of getting a commercial loan works, or if it is even possible.  

The short answer is yes, you can get a mortgage on a commercial property. If renting or leasing has become too much of a burden, a commercial mortgage is the way to go.  

 Differences between a home loan and commercial loan 

  • A typical home loan is paid back over a period of 30 years. A commercial loan, however, often is arranged to be repaid over a period of 5 to 20 years depending on your agreement. 
  • Home loans can have up to 100% loan-to-value ratios, while a commercial loan’s ratio is typically between 65% and 80%. 
  • Home loan terms are pretty standard and fit into general basic categories in terms of the length of the loan, monthly terms, interest, and amortization. Commercial loans have a bit more flexibility in terms of those things. However, being that they are paid to businesses and not individuals, the monthly payments are likely to be higher over a shorter period of time.  

 Advantages of a commercial loan 

Commercial loans are especially valuable to businesses with debts, needs for improvements, and flexibility with the building, including specific customizations for your business. The capital that is freed up by paying off a commercial loan means you’re likely to be saving a lot on rent each month. If your financial advisor recommends a commercial mortgage, it can be a great way to move forward with your business dreams!