Commercial property loans and terms explained
If you’re new to the world of commercial property or real estate development and loans, choosing the right loan and deciphering all of the real estate lingo can be quite confusing, especially if your background is elsewhere in business, or if you’ve previously only dealt with residential real estate. Commercial real estate loans are slightly different, and we’ll give you the rundown of some basic types of loans and other terms you should become familiar with.
Development Finance – A broad term to describe one or many construction loan facilities as well as other property development related finance to be used for the purpose of developing real estate.
Construction Loan – A type of development finance, this kind of loan is used to build or develop property.
Basic Variable Loan – A type of loan offered by some lenders, these have lower interest rates and lower repayments, but less features (such as flexibility or portability) than other loans such as standard variable loans.
Commercial finance – Describes finance which is provided for carrying out commercial purposes such as general business purposes or investment.
Commercial mortgage – Similar to a residential mortgage, except a commercial building rather than a residential property is used as the collateral to secure repayment.
Collateral – The collateral in a lending agreement is the property pledged by the borrower to secure the repayment of a loan to a lender. So, if a borrower fails to pay the repayments as specified in their loan agreement, the lender or bank obtains this collateral property from the borrower.
Of course, there are plenty of other types of loans offered by many banks and financial institutions. If you’re looking for commercial property for sale in Sydney, figuring out which loan is best for you is a matter of research and familiarising yourself with different loan types and terms. While it’s a great time to start thinking about acquiring commercial real estate, Sydney is a competitive market. But with a little research and the right-know-how, you can start making valuable investments in the world of real estate.
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