Loans for Business. Mortgages on commercial real estate

Mortgages on commercial real estate - is a special kind of loans for business, which is very similar in mechanism to conventional residential mortgages. Acquisition target in this case is non-residential property, for example:
Building for offices.
Warehouses.
Production facilities.
Trade halls, etc.
Also, commercial mortgages issued under higher interest rates and less time. For entrepreneurs and banks such service is very beneficial, as any risks are minimal due to the fact that the purchased property serves as collateral.

Terms and conditions of the mortgage for the purchase of commercial real estate.
Mortgage terms now are still very far from ideal, unfortunately. The main problem - it's a small popularity of such services in Russia. However, each year the bank offers are becoming more and more advantageous as the number of customers grows rapidly and constantly. Today are the following average conditions of commercial mortgage:
Loan term not exceeding 20 years.
The interest rate of 10%, but rarely more than 20-21%.
The maximum amount of credit funds in the range of US $ 4000000, which is very high compared to residential mortgage. By the way, commercial mortgages usually only issued in foreign currency.
Down payment - 15% -45% of the total cost of the acquired property.
Concerning the conditions today have one major flaw in the legislation. Bank inexplicably can not issue money as long as the borrower does not become owner of the property. Thus, a vicious circle, which greatly hinders the development of commercial mortgages. But while entrepreneurs are workarounds, and everything is solved individually. The most common way - a contract with the seller of the transfer of ownership only in part by the payment despite the fact that the bank acts as a guarantor of the transaction.
Positive aspects of commercial mortgages. They are not enough:
Typically, the quick return of the real estate.
Almost zero percent, given inflation.
Real estate prices are rising rapidly.
Property at any time can be sold to repay the loan and a profit at the same time.
For entrepreneurs often provided deferment of payments, for example, when a seasonal business.
Just a profitable investment funds.
Negative aspects of commercial mortgages.
The property serves as collateral (encumbered).
Payment of interest rates, but it is natural.
Fee for the use of funds.
Compulsory insurance of real estate.
Commission when you make a transaction from 0.1 to 2% of the total, which is often glossed over.
In conclusion, we can say that the mortgage for the purchase of commercial real estate necessary for business - this is probably the best and most profitable investment of money today. Real estate, including commercial, always in demand, in all the cities!