Learn About the Advantages of Commercial Property Loans
Posted on June 27, 2010
Filed Under Debt Relief, Loans, Mortgage, Personal Finance, Refinancing Solutions | Leave a Comment
Commercial property loans much like residential mortgage, use real estate as collateral for repayment.
A commercial mortgage is similar to a residential mortgage, except the collateral is a commercial building or other business real estate, not residential property. In addition, commercial mortgages are typically taken on by businesses instead of individual borrowers.
Borrowers in commercial property loans can be many different types of business entities. This makes the assessment of the credit of the borrower much more difficult than it is with borrowers in residential property loans.
Some commercial property loans are nonrecourse, meaning that in the event of default in repayment, the creditor can only seize the collateral, but has no further claim against the borrower for any remaining deficiency. This is a contrast to the norm with residential property loans, in which a lender can usually seize other assets of the borrower in the event of non-payment.
Many times the loan can be supplemented by a personal guarantee from the owner of a property, which makes the debt payable in full even if foreclosure on the mortgaged collateral does not satisfy the outstanding balance.
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