Commercial mortgages can be used for the following:
1. Shopping centers, industrial buildings, office buildings
2. Golf courses, resorts, hotels, parking garages, car washes
3. Construction loans, ground leases, seconds, wraparounds, etc.
Capital Type Capital Type Definition
Acquisition and Development Raw land
infrastructure development (streets, utilities, etc.)
Adjustable Commercial Mortgage
Interest moves with a specific index (Prime, T-Bills, etc.)
Construction Mini-Perm
Construction with 3 to 5 year loan, usually on income property.
Construction Loan with Take-out
Construction with pre-arranged takeout loan in place.
Fixed Rate Commercial Mortgage
Interest Rate remains constant throughout the term.
Hard Money Loan
Loans from private lenders based primarily on the hard asset value (commercial building, vacant land, etc.).
Interim Loan
A short term (2 yrs or less), bridge or project type loan.
Joint Venture
A financial partner in the development of real estate.
Participating Mortgage
Lender receives a kicker for gross income above a preset level.
Real Estate Sale and Leaseback
Lender purchases land and leases back to borrower (generally developer) for a fixed rent plus other considerations. Mortgages are issued on leasehold at market rates. Usually, produces more dollars than a mortgage.
Real Estate Purchase Loan
Lending for the purchase of commercial real estate.
Second Mortgage (Commercial)
Loan secured by equity behind that of the first lien.
Wraparound
Lender makes a second mortgage and assumes the first mortgage.
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