3 Factors That Differentiate The Average Commercial Loan Rate

A borrower has to deal with 2.2% to 18% of the average commercial loan rate. The interest rate depends on the type of loan a borrower chooses.

Lenders will also check the qualifications of the borrower, the type of building, and the project a borrower is about to finance.

Check the information about the average commercial loan rate based on specific factors. You have to do the same consideration to get the cheapest car insurance rate.

Average Commercial Loan Rate Based on Loan Type

You can check your average commercial loan rate based on the loan type you are about to choose. For example, you have to pay a 2.231% interest rate when taking SBA or Government-backed loans or USDA loans. 

The application process takes a long time because there are a lot of documents to complete. The higher the interest rate and down payment you pay, the easier to get the commercial real estate loan. The payment period varies depending on the type of loan you take. 

You should repay the loan up to 12 months if requesting a hard money loan. Borrowers who are requesting a Freddie Mac apartment loan have a longer repayment period of up to 30 years. 

Average Commercial Real Estate Loan Rates for Investment Properties 

The average commercial loan rate for investment properties is higher. In this case, you should pay at least 3.77% of the interest rate.

Borrowing money for buying investment properties means that you will use the money to renovate and resell the house to earn a profit. 

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You also have to prepare extra money to ensure a lender borrows their money. The ratio of the money is between 66% to 73% of the cost of the property you are about to buy.

The building type determines the average commercial real estate loan you will get. For example, the average loan rate for special purpose building is 6.26% with up to 23 years of the repayment period.

Average Commercial Real Estate Loan Rates for Building an Investment Property 

Buying and building a property are different. Because of that, the average loan rate is also different. You should pay higher interest rates for building a property for investment than purchasing a property for investment.

The interest rate ranges from 6.74% to 8.15%. The reason why lenders give a higher interest loan rate is that constructing a new building is riskier than purchasing a ready-to-use building.    

The point is that learning the average commercial loan rate is crucial. It helps to get the lowest interest rate no matter the type of property you are about to buy. 

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