{"id":12019,"date":"2020-04-03T13:06:46","date_gmt":"2020-04-03T13:06:46","guid":{"rendered":"https:\/\/kenyahomes.co.ke\/blog\/?p=12019"},"modified":"2020-04-03T13:34:15","modified_gmt":"2020-04-03T13:34:15","slug":"types-of-commercial-mortgages","status":"publish","type":"post","link":"https:\/\/kenyahomes.co.ke\/blog\/types-of-commercial-mortgages\/","title":{"rendered":"Types of commercial mortgages to know as an Investor"},"content":{"rendered":"\n<p>So you have decided to purchase a commercial property for investment, which one of the commercial mortgages will you have yo choose from? <\/p>\n\n\n\n<p>Mortgage loans can be divided into two categories:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Owner-occupier mortgages:<\/strong>&nbsp;This is used to buy a property that will be used as trading premises for your business.<\/li><li><strong>Commercial investment mortgages<\/strong>: This is used for a property you\u2019re planning to let out. &nbsp;<\/li><\/ul>\n\n\n\n<h6 class=\"wp-block-heading\" id=\"how-do-you-pay-interest-on-a-commercial-mortgage--6\"><strong>How do you pay interest on a commercial mortgage?<\/strong><\/h6>\n\n\n\n<p>Most commercial mortgages are paid at a variable rate. Typically, a rate will be quoted as X% over base or LIBOR, and this in residential terms would be called a tracker mortgage. Fixed-rate mortgages are available and for amounts under Kes 5,000,000, where the lender takes the rate risk themselves, they may be advantageous.<\/p>\n\n\n\n<p>The rates charged for commercial mortgages and business loans are not determined from the off-set like most personal loans are. Therefore, lenders usually have a risk profile that they work to, so if your loan falls outside their risk profile it will be refused.<\/p>\n\n\n\n<h6 class=\"wp-block-heading\" id=\"what-fees-are-involved--7\"><strong>What fees are involved?<\/strong><\/h6>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Arrangement fees:<\/strong>&nbsp;Arrangement fees are typically added to the loan after the loan is approved but some lenders may request the arrangement fees earlier to cover their work in case you don&#8217;t accept their offer. Arrangement fees are usually 1% -2% of the loan amount for loans.<\/li><li><strong>Valuation Fees:<\/strong>&nbsp;A valuer will visit the property and write a report to the lender. The fees are based on an individualised quotation which is payable to the lender after an initial indicative offer has been accepted.<\/li><li><strong>Legal Fees:<\/strong>&nbsp;You\u2019ll need to pay both your own legal fees as well as the lender\u2019s.<\/li><li><strong>Broker fees:<\/strong>&nbsp;&nbsp;A broker gives you advice specific to your situation and real estate and presents your case to the lenders. Their service is usually charged at up to 1% of the loan value.<\/li><\/ul>\n\n\n\n<h6 class=\"wp-block-heading\" id=\"eligibility-and-criteria-8\"><strong>Eligibility and criteria<\/strong><\/h6>\n\n\n\n<p>In order for you to qualify for a commercial mortgage, you\u2019ll need to pass the lender\u2019s eligibility checks which usually includes:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The cash flow and any debts you may owe to assess the financial health of your company<\/li><li>Your businesses\u2019 projected income to determine whether you can cover the cost of the loan<\/li><li>Your ability to pay the deposit which can range from 20% to 40% of the loan<\/li><li>Rental income may also be taken into account as this will have an effect on your business\u2019 cash flow<\/li><li>General income, credit and assets<\/li><\/ul>\n\n\n\n<h6 class=\"wp-block-heading\" id=\"alternatives-to-a-business-mortgage-9\"><strong>Alternatives to a business mortgage<\/strong><\/h6>\n\n\n\n<p>There are several alternative options you can choose from if you decide that a business mortgage is not the right choice for you:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Bridging loans<\/strong> can help you complete the purchase of a property before you manage to sell your existing home.<\/li><li><strong>Short-term loans <\/strong>can help you access funds without making any long-term commitments. This is often used for financial relief to cover working capital, cash flow, and a variety of expenses.<\/li><li><strong>Personal loans<\/strong>&nbsp;can be used to borrow anywhere &#8211; you do not have to be a homeowner to apply.<\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"<p>So you have decided to purchase a commercial property for investment, which one of the commercial mortgages will you have yo choose from? Mortgage loans can be divided into two categories: Owner-occupier mortgages:&nbsp;This is used to buy a property that will be used as trading premises for your business. Commercial investment mortgages: This is used [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":12022,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"amp_status":"","footnotes":""},"categories":[20,29],"tags":[],"class_list":{"0":"post-12019","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"category-financing"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Types of commercial mortgages to know as an Investor - Kenya Homes<\/title>\n<meta name=\"description\" content=\"So you have decided to purchase a commercial property for investment, which one of the commercial mortgages will you have yo choose from?\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/kenyahomes.co.ke\/blog\/types-of-commercial-mortgages\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Types of commercial mortgages to know as an Investor - 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