The purchase of commercial real estate will be financed with a mortgage on the property offered as collateral. The repayment of the loan will be determined by an amortization schedule that fits the type of property under consideration. The bank will require an appraisal report and an environmental assessment report on the property. Depending on the age of the building, various building inspection reports may be required as well. For income producing properties, a rent roll and operating statement will be needed.
Interest rates for these types of loans are usually fixed for a specific period and the rate may adjust after the fixed rate period has elapsed. The interest rate and fee structure will be decided based on the type of project being financed and conditions that pertain to the loan.
The amount of the loan will be based on a certain percentage of the purchase price or appraised value, whichever is lower. The percentage used to determine the amount will depend on the type of real estate being financed.