Commercial mortgage

A commercial mortgage is a loan facility for the purchase or refinancing of commercial properties, such as office buildings, industrial facilities, retail units, or mixed-use developments. The lender registers a mortgage right on the property, which provides legal security: in case of default, the asset may be seized and sold to recover the outstanding debt.

The loan amount is determined by the property's commercial value and its income-generating capacity, typically assessed through rental yields and lease terms. Interest rates on commercial mortgages are generally higher than residential lending, but often feature greater flexibility in repayment structures and tenors. Underwriting criteria focus on loan-to-value ratios, debt service coverage, tenant quality, and lease duration to determine borrowing capacity.