The principal is the amount of money you are borrowing from the lender. Our calculator will use the figures you input to determine your monthly debt service costs and amortization schedule, breaking each payment down to principal and interest components. Understanding the Commercial Mortgage Calculator It’s also an invaluable tool for refinancing an existing commercial property loan. It can help them better understand which loans fit within their budget. While you should also understand the financing dynamics specific to your asset type and your location through some form of commercial mortgage alert, our loan calculator can help prospective borrowers shop around for commercial properties. Take care to consider these figures when viewing your results to get a more accurate estimation of your monthly payments. Some lenders may require additional fees that could be worked into the monthly payment. Keep in mind that the calculator only shows the principal and interest portion of your monthly payment. This tool determines your estimated monthly payments, or debt service costs, based on the values you input: your loan amount, interest rate, amortization, and term length. One of the most useful tools is our commercial mortgage calculator. That said, having the right tools and know-how gives you a great advantage towards securing the financing you deserve. The experts at Commercial Real Estate Loans understand very well that there are few shortcuts to getting your commercial real estate financing. Getting a commercial mortgage is serious business. Learn more about current mortgage rates -> How to Use the Loan Calculator Others, like loans backed by the Small Business Administration, lock rates to the WSJ Prime. Many loans utilize the secured overnight financing rate, or SOFR, while others tie rates to the relevant Treasury yields. It is important to be aware of where these stand to get a good idea of what you can expect from your commercial property mortgage. That said, different financing options have rates based on different indices. The industry median interest rate for most commercial real estate loans usually falls about 3% above the effective federal funds rate. The payments are usually the same throughout the life of the loan as long as the interest rate is fixed. Amoritization ScheduleĪn amortization schedule is a timeline of all the payments of a loan up until the loan is completely paid off. Longer amortizations, lower interest rates, and lower loan amounts will reduce these payments. This is the total monthly payment due to the lender, and it includes both the borrower's contribution toward paying the principal and the interest of the loan. Other loans may include an interest-only period. Some short-term financing options, like bridge or construction loans, offer interest-only payments for the full term of the loan. Interest-only payments are those made to cover only the costs of borrowing the money to the lender. These are only required in partially amortizing loans, and they are often paid down by either refinancing or selling the property.Ī balloon payment's amount varies epending on the difference between the amortization and loan term as well as the interest rate. Balloon Payment Amountīalloon payments are lump-sum payments made when a loan matures. Shorter-term loans typically carry higher interest rates. ![]() ![]() For commercial real estate loans, terms typically range from anything as low as six months (for short-term bridge loans) to more than 40 years. TermĪ loan's term is the length of time a lender provides financing for. ![]() In these cases, a borrower must pay a lump-sum balloon payment at the end of the term. In a partially amortizing loan, the amortization period is longer than the term of the loan itself. In a fully amortizing loan, the debt is fully paid once the loan matures (its term ends). Generally, the longer the amortization period, the lower the monthly payment. AmortizationĪmortization is the process of reducing debt over time through regular payments. There is no single fixed interest rate, instead it depends on many factors, including a borrower's financial strength, the property type, the loan product, and the lender. A borrower pays this to the lender throughout the term of the loan. Interest RateĪn interest rate is the cost of borrowing money, and it is given as a percent of the loan amount. The amount of the loan you receive will vary depending on several other factors, including loan-to-value ratios and debt service coverage ratios. This is simply the total amount you are borrowing for your commercial real estate acquisition, refinance, or development. Need a quick refresher on the terms used in our calculator? Consult the list below.
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