A commercial mortgage is a loan given to an individual or business for buying, building, or improving a property. Commercial mortgages are available to businesses and individuals, but the amount you can borrow will depend on your credit score, income, and other factors. This article will explain how long it takes to get a commercial mortgage and what documents you need if you want to apply for one.
Steps in the loan process.
There are four main steps to getting a commercial mortgage:
- Application – You will be asked to provide basic information about your property, finances, and business plan. The more accurate you are in this step, the less time we’ll have to spend on it later on.
- Appraisal – This is where we determine how much money the property is worth based on its condition and location (the “loan amount” or “LTV”). We’ll also check that there isn’t anything wrong with the property that could make us lose money if we lend against it (known as an appraisal contingency).
- Underwriting – If everything looks okay so far, our underwriter will look at your financial statements and documentation for accuracy before deciding whether or not you’re allowed to get a loan from us (aka qualifying). If something doesn’t add up here—say, if one of your financial statements is missing or seems out of date—we’ll ask you for more information so that everything works out well for everyone involved in this transaction! Both sides must understand what’s happening throughout each step, so there are no surprises later on.”
Four weeks to lock in a commercial mortgage rate.
How long does it take to lock in a commercial mortgage rate? If you’re refinancing an existing loan and you’ve already gone through the application process, your lender can usually lock in a rate within two weeks. This is especially true if you have excellent credit and don’t need to do any “due diligence” on your property.
However, if this is your first time applying for financing or there are issues with your deal (such as the need for surveys), it may take longer before you can lock in a rate. In these cases, lenders will still try their best to get things done quickly but may need more time than usual to do their due diligence on the property.
Application, appraisal, underwriting.
The process for getting a commercial mortgage is very similar to that of getting a personal loan. The application process is the same as the appraisals and underwriting.
The only difference between the two loans is that you need more collateral and larger down payment with a commercial loan. The loan officer will help you through these steps and can answer any questions you may have!
Closing and getting the keys.
Closing is the final step in the process. This is when all your paperwork is finalized, and you get the keys to your property. Closing costs are paid at closing, so be sure to have enough money on hand for this.
What if my credit isn’t great?
Don’t worry! If your credit is not the best, we can still help. However, you will likely need a guarantor and pay a higher interest rate. In addition, most lenders require that properties be owner-occupied, so it’s important to ensure your loan qualifies for owner-occupancy before applying.
If you are in this situation, contact us today to discuss how we can help!
The timeline for getting a commercial mortgage depends on the size of the loan and how complicated it is.
The timeline for getting a commercial mortgage depends on the size of the loan and how complicated it is. The larger the loan, the more time it takes to process because more paperwork is involved, and more people need to sign off on it. Likewise, if your project has unique needs or circumstances that make it particularly complex, expect those issues to take longer than average.
In general, you can expect commercial mortgages to take anywhere from 30 days up to six months or even longer, depending on these factors—and that’s before any delays caused by weather or other unforeseen circumstances come into play! Of course, as with residential mortgages (which we covered in our previous article), this timeline can vary widely depending on individual circumstances, so be prepared for some above and beyond what’s outlined here.
In the end, being patient with the commercial mortgage process is a good idea. You can get an idea of how long it will take you by checking out our table and doing some research on your own. Still, so many factors go into the timeline for getting a loan that it may not be possible to predict exactly when everything will be done. So don’t get discouraged, even if you find out something needs more time! Instead, take a step back and figure out what went wrong so that you can fix it before applying again.