Everything you need to know about corporate mortgages

Corporate mortgages are real estate loans given to corporations to purchase commercial real estate purposes. Corporations take these mortgages to buy a real estate for a business, rental housing or for the purpose of developing a real estate business entity that already exists. If your corporation is thinking about creating a business or developing an existing one, you can turn to real estate agencies for corporate mortgages.

Like individual mortgage, corporate mortgages are secured against their real estates. Corporate mortgages are the main finances for most business and rental properties. Compared to individual mortgages, corporate mortgages represent only a small section of the market share. While individual mortgages are limited to housing, corporate mortgages can be used for various business purposes. Corporations are allowed to use these mortgages to buy property, secure land, develop an existing business and add a portfolio.

The mortgage loan given to corporate is usually long term.  If your corporation has the right qualifications, you can get up to 70% of the value of the property.  You can use the income from the business to make the mortgage payments, collect profit and create more capital. Your corporation is expected to make up for the 30% in savings to complete the purchase for a real estate. Owning corporate properties reduce s the rental income for business premises. Corporation mortgages give your business a chance to appreciate in value and gain some equity.

Interest rates of corporate mortgages are different depending on the terms of the lender. Lenders give mortgages to corporations only when they are sure you will be able to pay it back. When your corporation is applying for a mortgage you will need to present current performance numbers, three years or more of tax returns, documentation showing all partners, directors and investors of your business, documentation of all your assets and your company’s bank statements.

The short-term payment of a corporate mortgage starts from 5 years while the long term payment method can last up to 40years. This mortgage is a huge financial commitment, if your company does not keep up with the payments you may end up losing everything.  The interest rates for businesses are higher than those of rental houses because they pose a big risk on both the lender’s and corporation’s finances. If you offer guaranteed repayments, you can sign up for a 5-year fixed rate payment method

Like in individual mortgages, your corporation’s credit history plays a huge role in your mortgage application.  It may not be the main issue while you are applying for a corporate mortgage but it may determine the amount of mortgage you will receive. With a good credit history you will receive the maximum amount you can apply for.

You can maximise your business earning potential by renting out part of your real estate and using that income to cover part of the mortgage payments. Corporation mortgages are helpful when you want to start or grow a business. If you come up with the right strategies you will start noticing profits within the first year.