Using a Commercial Mortgage Calculator - How Lenders Determine Commercial Mortgage Rates
A commercial mortgage calculator is a very handy tool when shopping for a commercial mortgage loan. Whether you are purchasing a new investment property or refinancing an existing commercial mortgage, it is helpful to know how much of a loan you can afford at today’s rates. A commercial mortgage calculator will calculate your new monthly payment. You will be asked to enter the loan amount, number of years, and interest rate. The calculator will calculate your monthly payment for you.
Check out our commercial mortgage calculator.
Many borrowers ask us how commercial mortgage lenders determine rates that they offer commercial mortgage requests. There are many criteria that lenders use when determining rates, but lenders will assess the relative risk of a loan when determining the rate they offer. The lower the risk, the lower the rate. The higher the risk, the higher the rate. It is important to know what factors lenders use when determining relative risk.
– Property location and market. Good quality properties in large metropolitan and suburban areas are considered lower risk than inferior properties and properties in small rural locations.
– Tenant mix. Multi-tenanted properties with good quality tenants and long-term leases are very desirable when financing office and retail properties.
– Stabilized occupancy. Lenders look for properties that have enjoyed high occupancy levels with minimal disruption for the last 2 to 3 years. Properties with vacancies and fluctuating rental histories are considered higher risk.
– Property Condition. Properties in good condition with little deferred maintenance are considered lower risk than properties in need of major capital improvements.
– Leverage. Loan-to-Value is very important in determining risk. A 50% LTV loan will price better than a loan at 80% LTV.
You can check out our commercial real estate loan rates here. Then use our commercial mortgage calculator to determine your monthly principal and interest payment.
– Borrower Qualifications. Lenders look closely at a borrower or guarantor’s net worth, liquidity, cash flow, credit history and real estate experience in determining overall risk.
If you have a specific transaction that you would like to discuss, please call us at 1-877-548-9454 or click here for a free quote.
Author
Stephen A. Sobin is the President and Founder of Select Commercial Funding LLC. Mr. Sobin has over 35 years’ experience originating commercial real estate loans. He formed Select Commercial to offer commercial mortgage banking and real estate capital advisory services to his clients on a national basis. His goal was to become an advocate for his clients and to help them navigate the ever-changing economic conditions facing the banking industry and to assist them by providing access to commercial real estate funds despite the uncertainty of the capital markets. The company was founded on the belief that most small to medium sized property and business owners lacked the expertise and sources to obtain the best financing options in the $1,500,000 to $10,000,000 range. While large real estate companies often have in-house finance professionals, most small to medium sized borrowers do not have the same access to professional advice and sources of funds. Mr. Sobin focuses on providing those services to this segment of the market.