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A commercial mortgage is one of the best methods used to finance the acquisition of land or buildings for business ventures. It affords an accommodating and very reasonable financial plan for the purchase. Here are some questions a borrower may have when thinking about obtaining a commercial mortgage.
A. The two rate options are the commercial variable rate and the fixed rate. A customer opting for the commercial variable rate pays the market rate. In addition, the lender imposes a premium throughout the mortgage period. The variable rate changes in accordance with the base rate set by the Bank of England. The fixed rate option sets a specific rate for a particular period. The borrower pays the current variable rate when the period ends. Individuals opt for fixed rate mortgages when they expect the rates to rise in the near future.
A. Commercial mortgage payment schedules are predetermined. In fact, a borrower may fix a repayment plan to suit his needs.
A. A borrower retains total ownership in the property, as long he does not default on the mortgage payments. The owner does not need to resort to raising funds by selling shares in the property to other investors. Since the borrower designs the mortgage payment schedule, it is easy for him to manage the funds. Moreover, he saves in tax, as the interest is tax deductible.
A. A commercial mortgage obliges the borrower to pledge the property he has purchased to the lender as collateral. If he is unable to make a mortgage repayment, the lender may foreclose the property and sell it, in order to acquire the money owed by the borrower. After making the mortgage payments in full, a borrower must make sure that the lender makes available all government files acknowledging the full repayment of the mortgage.
A. A lender may identify a variety of incidents that amount to a default on mortgage payments. These may include failure to discharge the payments on schedule, declaration of bankruptcy, or any kind of violation of the mortgage agreement. The borrower should negotiate with the lender, while instituting the mortgage, for sufficient time to cure any kind of default. It is prudent to have the agreement in writing.