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This mortgage calculator can be used to figure out monthly payments of a home mortgage loan, based on the home's sale price, the term of the loan desired, buyer's down payment percentage, and the loan's interest rate. This calculator factors in PMI (Private Mortgage Insurance) for loans where less than 20% is put as a down payment. Also taken into consideration are the town property taxes, and their effect on the total monthly mortgage payment.
In many ways a commercial mortgage is just like a residential
mortgage in that you pledge real property as collateral against
a loan to either buy or refinance that property. You can also
receive a commercial re-mortgage and use it as a line of credit
for any business purpose. When you use a commercial mortgage to
buy property, or to raise funds for any other business purpose,
the lender retains an interest in that property until the loan
has been paid in full. Unlike other types of business loans,
which usually have a relatively short repayment period, you can
take out a loan for as long as 30 years if you like.
The lender receives repayment of the commercial mortgage
principal and interest over the lifetime of the loan. If you
default on the loan and go into arrears then the lender can
foreclose and take possession of the property which was used as
collateral.
Generally speaking, the interest on a commercial mortgage is tax
deductible and the net proceeds of the loan are not considered
to be taxable income. However, you should always check with your
accountant to be sure because the tax consequences can be severe
should it be determined that your usage of the funds was not for
a qualified business purpose.
Should you be seeking a commercial mortgage for the purposes of
operating your business, rather than actually buying property,
then the lender will either want to re-finance your current
mortgage, and include enough money to provide the amount that
you are seeking, or they may arrange an equity line where they
lend you the difference between the current value of your
commercial property and the amount that you owe on the current
mortgage.
There are generally two types of interest schemes available when
you are applying for a commercial mortgage.
The fixed rate commercial mortgage establishes an interest rate
that is in place either for the life of the loan or for a fixed
period of time. If it is for a fixed period of time then it will
normally convert over to the second type of rate, which is
called a variable interest rate, after the fixed time period
expires.
In some cases your lender may add a Early Redemption Charge
(ERC) clause to your commercial mortgage contract which states
that if you pay off the note prior to the end of the fixed rate
period then the lender is entitled to a one-time lump fee to
offset their loss of expected income. In some cases this ERC may
extend to longer periods possibly up to the entire term of the
loan. Be very sure to read your loan contract carefully to make
sure that you understand the implications of the ERC if it is
present.
With competition from lenders heating up you'll find that many
of them are dropping ERC clauses all together. If there is one
present in your loan contract you may be able to negotiate it
away with little effort. It's worth trying in any case and you
can always apply somewhere else if your lender is not willing to
negotiate.
In the case of a variable interest rate commercial mortgage the
rate is based upon those issued by Bank of England. The lender
will usually state that the rate consists of the published rate,
which will likely vary up and down over the life of the loan,
plus some pre-determined premium that remains the same for the
life of the loan. Be sure that you understand how frequently
your rate will change and that you are comfortable with the
amount that the lender is charging as a premium. As with any
terms of your loan you can negotiate both of these factors.
A fixed rate commercial mortgage is a good choice when you feel
that interest rates are headed up sharply and you want to lock
in the current rates. On the other hand, if interest rates are
in flux, and economic indicators point to a down trend, then a
variable rate may be your best choice.
Keep this strategy in mind during the lifetime of your
commercial mortgage. If you are locked into a fixed rate, and
interest rates have dropped significantly below what you are
paying, you should consider applying for a remortgage and
selecting a variable interest rate to take advantage of the
lower rates. On the other hand, if you are in a variable, and
all indicators are that interest rates will be skyrocketing
soon, then look to move into a fixed rate so you can protect
yourself against future increases.
About the author:
Commercial Lifeline are Commercial Mortgage and Bridging Finance
specialists.
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