Fixed Rate

Fixed Rate Commercial Mortgages

The traditional fixed rate commercial mortgage is one of many types of commercial loan programs, where monthly principal and interest payments never change during the life of the loan. Fixed rate commercial mortgages are available in terms ranging from 10 to 30 years. This type of mortgage is structured, or “amortized” so that it will be completely paid off by the end of the loan term.

Even though you have a fixed rate mortgage, your monthly payment may vary if you have an “impound account.” In addition to the monthly loan payment, some lenders collect additional money each month for the prorated monthly cost of property taxes and hazard insurance. The extra money is put in an impound account by the lender who uses it to pay the commercial property borrowers’ property taxes and hazard insurance premium when they are due. If either the property tax or the insurance happens to change, the borrower’s monthly payment will be adjusted accordingly. However, the overall payments in a fixed rate mortgage are stable and predictable, and who in the financial world doesn’t like stability and predictability?