When most people think of mortgages, they picture the loan used to finance that cute little house with the white picket fence. There is, however, another type of mortgage that has nothing to do with picket fences or houses, and that is the commercial mortgage.

While less prevalent than mortgage residential, the mortgage company is becoming an important part of the mortgage business. As more and more people abandon the traditional work force and strike out on their own, these entrepreneurs are choosing to buy their own property for the same reasons that make home ownership so attractive.

For one thing, owning the property out of which it operates provides a business with stability, protection from rising rents, and an easier budgeting process. Many business owners like to use a commercial mortgage instead of renting, since this provides a steady monthly expenditure that is easy to predict and budget for.

In addition, for many businesses, a commercial mortgage provides important tax benefits. It is important, of course, for each business owner to consult with his or her attorney or tax professional, since the actual structure of the business will have a great effect on the tax strategy used with the commercial mortgage.

There are some important differences to be aware of when shopping for a commercial mortgage. In some ways the mortgage application process for a commercial mortgage is similar to that encountered by a home buyer, but there are some differences as well. One key difference is that the length of the commercial mortgage is often shorter than the length of a typical residential mortgage. While it is not unusual for the mortgage on a home to stretch for 30 years, the typical commercial mortgage is limited to 15 or 20 years. In some cases the term of a commercial mortgage will be as short as ten years.

Another key difference between the average commercial mortgage and a similar residential mortgage is that more importance is usually given to the value of the property when it comes to a commercial mortgage. While the creditworthiness of the borrower is still important, it is less so than with a residential property. This is because the lender has the underlying value of the property financed to protect them. This means that they look for any bad credit, credit report, credit score and credit history and the appraisal process on a commercial mortgage will likely be very thorough.

It is also important for the business owner to understand that a commercial mortgage usually requires a much higher down payment than the mortgage on a home and in case of bad credit business loan the figures may increase more. While many homes these days can be bought with 10%, 5% or even 0% down, most commercial mortgage lenders will be looking for a minimum of 25% or 30% down, so it is important to plan accordingly.