1. What is a Commercial Mortgage Loan?

A commercial mortgage is a loan secured by commercial property, such as office buildings, retail spaces, or industrial properties. Unlike residential mortgages, commercial loans typically have shorter terms (5-20 years) and different qualification requirements.

2. How Does the Calculator Work?

The calculator uses the standard mortgage payment formula:

Where:

• \( Principal \) — Loan amount in dollars
• \( Rate \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (loan term in months)

Explanation: This formula calculates the fixed monthly payment required to fully amortize the loan over its term.

3. Importance of Mortgage Calculation

Details: Accurate payment calculation helps businesses budget for property expenses, compare loan options, and determine affordability before committing to a commercial mortgage.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate (as a percentage), and loan term in years. The calculator will show the monthly payment, total payments over the loan term, and total interest paid.

5. Frequently Asked Questions (FAQ)

Q1: What's typical for commercial mortgage terms?
A: Commercial loans often have 5-20 year terms with amortization periods of 15-30 years, usually requiring a balloon payment at term end.

Q2: How do commercial rates compare to residential?
A: Commercial rates are typically higher (0.5-2% more) due to greater risk and shorter terms.

Q3: What additional costs should I consider?
A: Factor in property taxes, insurance, maintenance, and potential commercial mortgage insurance (CMI).

Q4: Are prepayment penalties common?
A: Yes, many commercial loans include prepayment penalties, especially in early years.

Q5: What LTV ratios are typical?
A: Commercial loans usually require 25-30% down (70-75% LTV), varying by property type and lender.