When you are interested in buying property, no matter what its purpose, the first thing you are going to do is look for a mortgage. Banks provide mortgages for you to buy or build property based on what you need and what you can afford. However, they approach businesses very differently than they do individuals.
A mortgage is a loan that is provided for buying or redeveloping the property. It comes with relatively low-interest rates and repayments usually occur over a long period of time – on average 30 years.
If you are looking for a mortgage you need to decide whether to get a residential or commercial mortgage. Your choice will depend both on what you need it for and how the bank is likely to see you.
These are the differences between residential and commercial mortgages.
Residential Mortgage
A residential mortgage is provided to anyone who wants to build or buy a home. However, this might also be the best option for you if you are self-employed and want a base to work from.
The main benefit of residential mortgages is that you get a lower interest rate. You also don’t need to have registered a company to take out a residential mortgage. In other words, as long as you have a good credit score and are earning enough money, you will have no problem getting a residential mortgage.
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Commercial Mortgage
A commercial mortgage, on the other hand, best suits businesses, whether established or just starting up. A mortgage can help new businesses put a down payment on a new property or redevelop property to suit their company’s purpose. You will also be able to borrow money off it in the future for business purposes if necessary.
Unlike residential mortgages, a commercial mortgage will generally last from one year to fifteen years. While you will have to pay a slightly higher interest rate, you will be able to get this loan without having to prove your earnings. Rather, the bank will look at your business’s financial state or viability. Thus, even if you have bad credit and are not earning an income from part- or full-time employment, you will be able to get a business mortgage if your business is well planned.
Once you’ve opened up a business mortgage, you also enter into a new kind of relationship with your bank. You are now communicating with them as a business, and are open to opportunities, with new products and deals on offer. You will also be able to communicate with your bank regarding ways to reduce taxes and improve your financial standing.
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Getting a mortgage
Whatever the reason you are getting a mortgage, the process today is easier than it has ever been. A mortgage will give you the ability to purchase your dream home or make your business into a reality. As long as you know exactly what you’re getting into, you can make the most of these kinds of loans. If you’re not sure about your eligibility, speak to your bank about the factors that might disqualify you.
