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18 December 2010

Business Mortgages Interest Rate and Payment Schedules

A part of every business mortgage loan is the rate of interest. There are two main interest rate selections that a borrower must consider. A business mortgage can use a fixed rate, or a variable rate.

The way that a business mortgage works that has a fixed rate interest is that an interest rate is the same for a certain period of time. When this period of time is over with, the borrower has to pay the variable rate. In addition to the interest rate fees, the commercial mortgage lenders will also charge an arrangement fee.

Another charge that you might see with a fixed rate is an early redemption charge. This kind of charge can go over the fixed period of the loan. A lot of people have not agreed upon this extra charge, so most business mortgage lenders are now offering commercial mortgages that have no charges for any extra payments or changes the contracts after the fixed period of time is over with.

You most likely want to borrow a commercial mortgage that has a fixed rate when you think that the interest rate might increase or you want to make sure that what you pay each month pretty much stays the same over a longer period of time.

The other type of commercial mortgage is that which has a variable interest rate. This type of commercial mortgage carries an interest rate changes based on when the Bank of England's base rate changes. A lot of times, the variable interest rate can be lower than the rate on a fixed rate mortgage.

You actually have the possibility to save your money with a variable interest rate mortgage when the overall interest rate of the market goes down. If that same rate does go up, your monthly payment will also go up because your interest rate will increase.
If you compare business mortgages to residential mortgages, you will find that the interest rates run a little bit higher on the commercial mortgages. The terms of the arrangement will also run less than that of the residential mortgages. The rates whether fixed or variable are all based on the Bank of England base rate. You will find that the rates tend to be anywhere from one to 7 per cent higher than this base rate.

Once you have been approved for a business mortgage, you will negotiate the repayment terms. The terms that you will negotiate will be either a monthly repayment schedule or an interest-only payment schedule. The interest-only terms mean that you will also need to have another product that will handle the principle portion of the commercial mortgage.

If you are ready to talk to a business mortgages specialist, make sure that you get the specific details surrounding a fixed rate commercial mortgage versus a variable rate commercial mortgage. You'll also want to make sure that you get the details on any extra fees that might be added to your business mortgage.

Visit Business Mortgages Broker today to get a quotation for your business mortgage.

Visit http://www.businessmortgagesbroker.co.uk today to get a quotation for your finance. In addition, we also offer free business plan templates, which are available to download from our website.

We would be very happy to help with any questions which you may have.
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