How Do Commercial Property Loans Work in Bakersfield, CA?
If you plan on entering the commercial real estate investment market in Bakersfield, it’s essential to understand the basics of commercial property loans. That way, you can find out if this loan will help you achieve your goals in real estate investing. Read along as we explain what you need to know about commercial property loans in and how they differ from residential loans.
What are Commercial Property Loans?
A commercial real estate loan is a type of loan used for financing property used for business-related purposes like malls, office buildings, etc. Commercial loans can be utilized for both purchasing and renovating commercial properties.
Difference between Residential and Commercial Loans
Residential mortgages are typically designed for individual borrowers, while commercial mortgages are usually granted to business entities such as developers, corporations, partnerships, etc.
Residential mortgages have high loan-to-value ratios of up to 100%, while commercial mortgages’ loan-to-value ratio ratios usually fall into the 65% to 80% range. Also, commercial mortgage terms typically range from 5 to 20 years, while the most popular residential loan is 30-year-fixed-rate-mortgage.
Rates and Fees of Commercial Real Estate Loans
Commercial property loan interest rates are generally higher compared to residential loans. In addition, commercial property loans usually have fees that add up to the overall cost of the mortgage, which includes legal, loan application, appraisal, survey fees, and loan origination.
Before the loan gets approved, you’ll have to pay some of the costs upfront, while others apply yearly.
Presently, commercial property loan rates range from 3% to 20%, but it will depend on the exact type of mortgage, property, and your financial profile. Also, the repayment term might be shorter for commercial property loans, which means they could be pricier than residential loans.
How to Get a Commercial Property Loan
The process for getting a commercial property loan and getting a home loan is similar. Just like in getting a home loan, when you apply for a commercial property loan, you’ll have to provide documentation showing items that include debts, income, assets, and credit profile.
Also, keep in mind that in this type of loan, the eligibility requirements are stricter than personal loans. In addition, the factors that lenders consider can be a little different.
Your Bakersfield Commercial Loan Professionals
You can use these insights to get the right commercial property loan in Bakersfield, California, for your commercial establishment construction, refinancing, or renovation.
If you have additional questions about how commercial property loans work, you can contact us for assistance. Our commercial loan advisors at Accelerated Lending Group would gladly answer all of your queries.
* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.