Who needs a commercial mortgage broker?

A commercial mortgage broker is a financial specialist focused on securing commercial and business loans for their clients. Just like you may enlist the help of a mortgage broker when buying a house, you could seek the services of a commercial loan broker if you need assistance with a business loan or commercial mortgage.

When looking for a commercial mortgage, you may find that meeting the qualifying criteria is harder for a business than for a personal mortgage. It’s often difficult for a lender to assess your repayment capacity as a business. You’d probably have a consistent spending and earning pattern that works for repaying your home loan as an individual. But as a company, your finances may fluctuate more often, making commercial loans riskier for lenders than residential home loans. 

This higher risk means you’ll be asked to provide more paperwork to convince a lender you’d be able to repay the loan. A good commercial mortgage loan broker can simplify this process. They’ll help by preparing and filing the application on your behalf and negotiate a potentially better rate than what is advertised by the lenders. 

If you’re thinking of financing a commercial property, engaging a commercial mortgage broker could be helpful in several ways.

Faster and hassle-free paperwork

When you apply for a commercial mortgage on your own, you might spend a significant amount of time identifying the right lender. This can seem pointless if that lender doesn’t approve your application. Or the approval process takes a long time, but you need to get financing in a hurry. 

A commercial mortgage broker can help in these situations by submitting your application to the lenders who are more likely to approve it. They can take into account if you need the financing fast and help expedite the process to get you the money as quickly as possible. 

Access to better rates and deals

The interest rates and other fees associated with business or commercial property loans tend to be higher. If you can secure even a small discount, you can save a significant amount of money in the long run. 

A decent commercial or business mortgage broker can help you compare apples with apples to pick the cheapest and most suitable mortgage deal for you. Sometimes, commercial brokers are provided exclusive special offers by some lenders because they’ve worked with them for a long time and brought the lender a lot of business. The brokers will often pass along these savings to you, giving you access to cheaper interest rates and other discounts.

Save time and money

A commercial mortgage broker can also save you time and money by letting you leverage their relationships with other industry professionals. For instance, a seasoned commercial mortgage broker will have a network of reliable professionals, including accountants, lawyers and appraisers they can refer to you. 

With hundreds of commercial mortgage brokers in the market, it’s natural to feel overwhelmed. But finding an experienced broker to guide your property journey doesn’t have to be complicated. By doing a little research beforehand and following a few tips, you can find the right commercial broker for your purchase.

It generally costs you nothing to hire the services of a commercial mortgage broker but it’s worth asking the broker about how they are paid and whether they charge anything to customers.

Most commercial mortgage brokers are paid an upfront commission and a trail commission for the business they bring to a lender. The amount is generally based on the loan size and other factors. This means you get to access the services of an expert mortgage broker for free. 

A trail commission is paid to good mortgage brokers because they shouldn’t only offer you a one-off service. They should continue to work with you to make sure the loan is still the right one for you. This may mean refinancing the loan at a later date or just restructuring it. Lenders typically pay them for the quality of business they bring and to manage the relationships with borrowers to minimise loan defaults. It’s a win-win situation for you because a broker who’s doing their job well will ensure you’ve got a loan that won’t cause you financial stress. 

Overall, working with a commercial broker that has a relationship with a wide range of lenders improves your chances of approval and securing a competitive deal on your commercial property mortgage. Mortgage brokers are also required to work in your best interest, which means they need to find a deal that doesn’t put you in an adverse financial situation. If you’re looking for a business or commercial loan, you can consider speaking with a specialist broker to learn more about your options.