Commercial Mortgage Repayment Plans
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Commercial Mortgage Repayment Plans
When deciding on your repayment plan you should always remember the longer you take to payback the principal the higher your total interest payment will be.
Commercial Equal Payments
Possibly the most common plan, this type of mortgage requires you to make a set number of equal payments. Part of each payment covers the interest and the rest reduces the principal.
Possibly the most common plan, this type of mortgage requires you to make a set number of equal payments. Part of each payment covers the interest and the rest reduces the principal.
Commercial Equal Payment with a Final Balloon Payment
Requires a set monthly payment of the principal and interest for a relatively short period of time. After you make the last payment, you have to pay the balance in one full payment, called a balloon payment. Most lenders will give you the chance to refinance the mortgage to help you stretch out the final balloon payment. This type of mortgage offers has many benefits. Because of the lower monthly payments during the course of the mortgage you can keep more cash available for other needs. But don't forget the big balloon payment waiting around the corner.
Commercial Interest-Only Payments with a Final Balloon Payment
With this type of mortgage, your regular payments only cover the interest. The principal stays the same as above.
Commercial Endowment Mortgage
This type of mortgage is similar to an interest-only mortgage but the repayment of the principal comes from the proceeds of an endowment policy. Several types of endowments are eligible for this type of mortgage, this includes: a personal or executive pension plan policy, life assurance policy or a personal equity plan. The additional security provided by the endowment normally result in a lower interest rate.
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