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Below, you'll find extensive
information on leading mortgage application articles and
products to help you on your way to success.
Commercial Mortgages - Using Your Assets As
Collateral
By Wildfire Marketing Group Content Distribution Team
When you apply for a commercial
mortgage, your chosen lender will require you to use
the assets of the company as collateral on the loan.
Lending money can be a risky business and even more so
in certain industries. A responsible lender will
therefore make some checks about the individual business
before offering to lend the money you may have applied
for.
One of these checks may be to analyse the value of the
business and in particular, the value of the assets of
the business as it will be they that the lender will
enforce a sale of should the organisation default on the
mortgage repayments. The assets can take many
forms, but here we take a look at a few of the more
common ones:
- Property - commercial mortgages can be acquired
using either commercial property as security or by using
residential/privately owned property, namely that owned
by the directors or principles of the business. The
lender will look at the LTV (loan to value) of the
property in question together with the repayment history
on the property.
- Plant and equipment - can play a very important role
in making an application for a commercial mortgage.
The working life of the plant and equipment in question,
will determine their suitability for being used as
collateral for a loan. For instance, a shipping company
may be able to use the ships they already own, together
with any plant and equipment they own and use to
maintain the ships as collateral on a loan to purchase
another ship. Items that have a much shorter working
life are less valuable in terms of securing a loan for
obvious reasons although collectively, you may be able
to use them as part of the general inventory of the
organisation. Such short term assets are likely to be of
zero value long before any loan that you may look to
secure on them has been repaid.
- Revenue - regular income may also be welcomed by a
potential lender as collateral on a commercial
mortgage. Weekly, monthly, quarterly and even annual
revenues are likely to be used to repay the mortgage
in the first place. The lender will analyse whether the
growth of these revenues, at least in part, demonstrates
a lower risk than a business where revenues are static
or even falling.
What Do I Need To Do To Apply?
Enquiring about commercial mortgages is
comparatively easy these days. There are many online
brokers to go to. Simply complete the online form which
may only take a few seconds and you may then receive a
call from a commercial loan consultant who will guide
you through the process, the vast majority of which may
well be handled by the broker on your behalf.
In addition to completing, signing and returning a
written credit agreement, you will almost certainly be
required to provide supporting documentation. This may
include things like:
- Financial projections
- A business plan
- Loan type, amount required, purpose and any projected
profits you think you will generate as a result of the
mortgage
- Company incorporation certificate
- Bank account information
- Credit references
- Company accounts (likely to be three years)
Dependent on the information you supply, you may find
that you could have access to the funds in a matter of a
couple of weeks.
Your broker may be able to help you with a whole host of
questions you may have, so always ask if you need help.
It's likely to be a big decision to go for a commercial
mortgage but businesses do this every day and
become more successful because of the opportunity to
expand and improve their range and quality of services
to their customers.
Article Source:
http://www.articlemap.com
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