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How to evaluate the different types of commercial mortgage
C-loans claims there are 12 distinct commercial mortgages. The following article groups these 12 types under three categories, permanent, equity and short term commercial loans.Essentially conventional commercial mortgages differ from residential mortgages, in that commercial mortgages finance the purchase of commercial property. Standard commercial mortgages are sometimes referred to as “permanent loans,” and characteristically have terms longer than five years with some degree of amortization.
Commercial property owners can also take out second mortgages. However second mortgages are uncommon when it comes to commercial property. The terms of many permanent loans expressly forbid borrowers taking out a second mortgage. A more common practice is for corporations to borrow against shares ownership, known as a mezzanine loan. In case default mezzanine loans usually grant lenders the option to buy back shares ownership in a corporation and seize control of the companies property.
Some types of commercial financing are not even loans at all.These arrangements are termed equity partnerships. In a preferred equity partnership a “preferred” investor lends a corporation money for a fixed share of the company’s profits in the future. In addition there are joint venture and venture equity partnerships. Joint venture partners often finance the full price of a construction project in ... more

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