Commercial mortgage

A commercial mortgage is a loan made using real estate as collateral to protecting repayment. Commercial mortgage is similar to a residential mortgage, except the collateral is a commercial building or other business real estate, not residential property.

In calculation, commercial mortgages are usually taken on by businesses as a substitute of individual borrowers. The borrower may be a partnership, incorporated business, or limited company, so assessment of the creditworthiness of the business can be more complicated than is the case with residential mortgages.

Commercial mortgages are typically non recourse i.e. that in the event of default in repayment, the creditor can only seize the collateral, but has no further claim against the borrower for any remaining deficiency. Less commonly, the mortgage is complement by a general obligation of the borrower, which makes the debt payable in full even if foreclosure on the mortgaged collateral does not satisfy the outstanding balance.