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Choosing The Right Commercial Real Estate Mortgage For Your Property

by

Vikram Kumar

Currently, there are numerous commercial real estate mortgages. You have to consider many factors before you decide the type of Commercial real estate mortgage rate you want. One of the most crucial factors is the exit strategy. In case you want to purchase and keep a retail center for a long period of time, then you would opt for a long term permanent loan which has a fixed interest rate. If your plan is to buy an apartment building and then flip it quickly, then you would consider loan with a low upfront cost and an interest rate that is low.

The Common Types of Mortgages

1. Long term loans if you are looking for loans of up to 10 years, then you should opt for these loans. They are a fixed rate loans and they tend to have a payment penalty. The long term loans are usually amortized over a period of 30 years.

2. Short term loans these loans are usually suitable for someone who wants the loan for up to 3 years. Their interest rates are lower than the long term loans. These loans are amortized for less than thirty years. If you are planning to sell the property within a very short period, then these loans will come in handy. Another reason to opt for short term loans is the fact that they will cost you less since they dont have a prepayment penalty.

3. Conduit loans the interest rate of these loans is usually very low. They have a long amortization period and are nonrecourse loans. Nonrecourse is whereby you are not legally responsible for the loan. The conduit loans are good for properties with credit tenants.

4. Small business administration (SBA) loans the SBA are the ones that insure these loans. The loans are given though the SBA approved lenders. They have various favorable terms. This includes:

Low down payments

A long loan terms

Low interest rates

40 year amortizations

The sba loans are usually given to owners occupying at least 51% of the property. If you occupy at least 60% of the building, you can use it as a construction loan.

6. Mezzanine loans these loans mostly go with a construction or permanent loan. This is because the lenders are not supposed to exceed 80% loan-to-value. They stack on top of other loans in order to get you up to 90% loan-to-value. This is typically done on larger projects and is not secured by a deed of trust or mortgage. They are secured by a security agreement against the ownerships stock in the llc.

7. Bridge loans these are short term financing. They are used to bridge the gap between finding permanent loans and closing the permanent financing. The bridge loans funds deals very quickly.

8. Stated income or no documentation loans this loan does not require you to show any proof of your monthly income or income tax returns. You must, however, have a good credit and the property must be in good shape.

9. Hard money loans these loans requires a hefty down payment. The interest rates are high and they require one to pay 3 to 10 points for the loan. The hard money loans dont require good credit and they tend to close quickly. These loans can be used if you get a good deal and you need cash quickly.

Before settling on

residential construction loans

, you need to match the loan to your plan for the property. You have to ensure you put the

Commercial real estate mortgage rate

in good by matching it to your goals. You should avoid getting the wrong loan for your property as it will result to massive losses.

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How can good conveyancing solicitors make the process of conveyancing easier, faster, and better

by

Ittaman Pattat

Below is the outline of the process as described by a leading conveyancing law firm from the point of view of a buyer.

1. Pre-exchange of contracts

Once instructed to proceed on your behalf your conveyancing solicitor will write to the estate agent and financial advisor (where applicable) to confirm our instructions on your behalf. Then he will write to the other sides conveyancing firm with a list of pre-contract enquiries, to confirm our instructions and request them to send the draft contract papers to us. Pre-contract enquiries are a set of standard questions aimed at obtaining more information about the property in question, such as: what furniture (if any) is being left behind, the boundaries of the property, who owns and is responsible for any hedges or fences. If it is a leasehold property, we obtain details of the managing agents, and discover whether the current owner is up to date with things like service charge bills and ground rent.

The next step for your conveyancing solicitor is to carry out searches regarding the property you propose to purchase. These will almost always include a local authority search and an environmental search. Some of the below searches would have been provided in the home information pack and as such would not be required.

Local authority searches usually take around six to nine working days to complete and will establish the following: proposals for any public works such as a new motorway, waterworks or alterations to road systems; whether any new developments are planned in the vicinity of the property; any problems with water drainage systems; and any planning restrictions that may affect your plans to renovate or alter the property.

There may be other searches required, depending on the location of the property, such as a coal-mining search or a search from a local railway network. We will inform you of any such requirement at the earliest.

Draft Contracts

Upon receiving the draft contract from the sellers conveyancing firm, your conveyancing solicitor will check the documentation and raise any specific queries that arise

The contract is then amended by mutual agreement between your conveyancing solicitor (on your behalf) and the sellers conveyancing firm. The contract is a legal document drawn up by the sellers conveyancing firm that sets out the terms of the sale process. The contract will reflect details of the following:- property being sold; names of both the buyer and seller; the property price and details of anything else that has been negotiated to be included with the sale; the date on which the transaction will take place; and the completion date once all parties have agreed on this.

Once your conveyancing solicitor is satisfied with all the legal documents and replies to enquiries in connection with the property, the contract is approved and sent to both parties for signature

2. Exchange of contracts

Deposit

On exchange of contracts of a purchase it is usual to pay to the sellers’ conveyancing firm a deposit of up to 10% of the purchase price, but it is sometimes possible to agree to a 5% deposit.

Once we have your deposit in cleared funds, signed contract and authorisation, your conveyancing solicitor can proceed to the exchange of contracts with the sellers conveyancing firm and agree a completion date. The deposit will be forwarded to the sellers solicitors on exchange of contracts, as security in case you do not proceed with the purchase. (Please read the section below on Money Matters)

Exchanging contracts

Until the exchange of contracts, there is no legal liability on either the purchaser or seller to proceed and either party may withdraw from the transaction at any time.

Once contracts have been exchanged (usually by a telephone call between conveyancing solicitors) both parties become legally bound by the terms and conditions of the contract and will be required to complete the contract.

The agreed completion date will be included in the contract; you will not be able to change the completion date once contracts have been exchanged. If you cannot complete on the contractual completion date your deposit may be forfeited and you may be sued for breach of contract.

Stamp Duty Land Tax (SDLT)

The completion of the SDLT form is your responsibility and you may complete this form on your own or ask your conveyancing solicitor to complete it on your behalf. However, when a conveyancing firm act as your agent in completing the SDLT form they may make a reasonable charge for the additional work. In which case their charges would be reflected in the estimate of costs provided.

Please note that there are strict time limits that must be followed. In the event the SDLT form is not received by the Inland Revenue within 30 days of the date of completion, you will be charged penalties.

3. Pre-completion

Between exchange and completion the following takes place:-

Transfer

The seller will sign the transfer document. This is the document that your conveyancing solicitor lodge with the Land Registry to prove the existing owner agrees to the transfer of ownership of the property to you.

Mortgage funds

If there is a mortgage lender involved, your conveyancing solicitor will contact them to release your mortgage funds in time for completion. Please note, to avoid late completion most conveyancing firms request for mortgage funds two days prior to completion. This may mean that you will be charged interest by the bank for 2 additional days.

Final searches and enquiries

By this stage, Land Registry searches would have been completed. These searches disclose any mortgages that are on the property and any disputes concerning the property.

Financial Statement

Your conveyancing solicitor will send you a financial statement showing the amount required to complete the transaction. This statement will detail all expenses incurred on your behalf or about to incur and includes our fees. It also states the stamp duty payable.

Building Insurance

From the point that contracts have been exchanged, you may become responsible for the property, which means you should obtain suitable building insurance to cover the property. Buildings insurance should be for the full reinstatement value (as specified in your valuation report) and your lenders interest should be noted on it.

4. Completion

On the day of completion, your conveyancing solicitor will send to the sellers conveyancing firm via telegraphic transfer the purchase monies. The sellers conveyancing firm will then confirm receipt once they have received the money, and will then authorise the seller to release the keys to you.

Unless you state otherwise all correspondence from the day of completion will be sent to your new address.

After completion the following happens :

The seller’s conveyancing firm will forward the transfer and title deeds to your conveyancing solicitor.

Your conveyancing solicitor make an application to the Inland Revenue to pay the stamp duty on the property.

Your conveyancing solicitor make an application to the Land Registry to register the property in your name.

Exception to the rules: simultaneous exchange & completion

If the property is vacant and all parties are in agreement with this method of completion, your conveyancing solicitor can arrange for contracts to be exchanged and the transaction to be completed on the same day.

5. Registration

Once the property has been registered in your name, we will send the title deeds to your mortgage lender, who will hold on to these as security until the mortgage has been paid off. You will receive a letter confirming registration of the property in your name with a certified copy of the registration documents showing your ownership of the property.

Phew! offers a highest-quality service at all times – without exception. It has all the checks in place to ensure this.Clients can get an instant online quote. Clients receive SMS updates, 24 hour online case tracker, direct dial access to the solicitor. Clients can also submit documents electronically and make payments either online or via the phone. http://www.phew.co.uk, http://www.viewexperts.com, http://www.pukkaproperty.com

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How can good conveyancing solicitors make the process of conveyancing easier, faster, and better}