An example of when you might use a commercial bridge loan: The interest rate tends to be 50 to 200 basis points higher than a traditional, fixed-rate mortgage – though the interest rate will fluctuate depending on the nature of the deal. Generally, commercial bridge loans are intended to provide 6-12 months’ worth of financing before repayment is due. The short-term nature of these loans means that they come with a higher interest rate than a permanent commercial mortgage loan. The bridge loan may be used to fund the balloon payment before refinancing into a more traditional commercial loan. Commercial Bridge Loans What is a Commercial Bridge Loan?Ī commercial bridge loan is a source of short-term capital that is often used for debt service until an owner improves, refinances, leases, sells or otherwise completes a property transaction.įor instance, a commercial bridge loan may be used by an investor that has a balloon payment coming due. Lenders might also include other large entities like insurance companies or property investment firms- MetLife and Prudential serving as prominent examples there.įor a list of commercial lenders of all types, you can visit Scotsman Guide’s lengthy lender directory.

➤ “Lender from TD Bank Turns Days of Work to Minutes” Most of the big American banks offer conventional commercial mortgages.įrom JPMorgan Chase, to Wells Fargo, Capital One, Bank of America and so on, you can usually turn your local big bank for a conventional home or commercial loan. Investors have to have good credit (700+), but in return, are able to access low-cost capital relative to the other loan products available to investors. Traditional, fixed-rate mortgages are more frequently used by investors looking to buy an existing, occupied asset with positive cash flow. Lenders will order an appraisal to confirm the value of the property, and will want to see a copy of the financials to determine whether the existing rents can support the debt service. While home loans can last 20-30 years in a lot of cases, commercial mortgages will more often fall in the 5-10 year-term range.

Lenders typically require a 25% down payment (minimum) in exchange for a fixed-rate mortgage ranging from 5 to 30 years. Conventional Commercial Mortgage Loans What is a Conventional Commercial loan?Ĭonventional commercial loans are similar to what you’d get when purchasing a single-family home, but often with shorter terms.Ī large portion of commercial real estate investors still purchase property using traditional, fixed-rate mortgages. To cut through some of the complexities of the lending process, and to aid in your property debt research, we’ll look at six different loan types, including new loans and refinance loans. In general, commercial real estate loan types can be broken out into three broad categories-loans for investment, loans for development, and loans for businesses. A mortgage broker trying to find the right loan for a client.A developer seeking a loan for an upcoming project.An investor seeking a new loan for an existing property.Types of Commercial Real Estate Loansįor the following professionals, understanding the commercial loan process is vitally important: We’ll describe each loan type, who uses them, typical terms and rates, and then look at the commercial lenders that provide them. In this article, we’ll look at the different types of commercial real estate loans.