What is commercial real estate lending?
Mortgage loans and pan credit loans or other types of financing, provided to companies for the purchase of real estate used for commercial purposes.
Commercial real estate lending provides companies with mortgages or other types of financing for the purchase of real estate used for commercial purposes.
Commercial real estate includes housing (for example, hotels, apartment buildings, condominiums and housing estates); office buildings; retail buildings (for example, shopping malls and shopping centers); warehouse, warehouse and production facilities; hospitals and other medical institutions; restaurants; recreation parks; and damp earth.
- Commercial real estate lending is financing provided to companies to acquire commercial real estate.
- Commercial property loans are usually secured loans with the property being purchased as collateral.
- Because the large size of most commercial real estate loans presents a greater risk to the lender, higher down payments are required than home mortgages.
The Importance of Commercial Real Estate Loans
Commercial real estate loans are an important part of the economy for two main reasons.
- First, they are usually an important source of funding for almost all businesses to operate.
- Second, because commercial real estate loans are usually much larger than residential loans, they provide the bulk of the income of commercial banks and other lenders who provide them.
While inherently residential loans are very similar to real estate loans - loans to buy real estate, usually secured by the real estate itself - commercial real estate loans cover a much wider range of loan types and are available from a wider range of types of lenders.
Commercial real estate loans can be obtained for various purposes. The company may seek to acquire an office, warehouse, or production area; a business may seek financing to acquire a rental property; a homebuilder may need a real estate loan to finance a new construction project.