Mortgage
A loan secured by real estate property.
A mortgage is a loan specifically secured by real property—the property itself serves as collateral. Commercial mortgages fund the purchase of business property and typically require 20–30% down payments with terms of 15–30 years. Interest rates may be fixed, adjustable, or a hybrid. If the borrower defaults, the lender can foreclose on the property.
Example
A business owner takes a $500,000 commercial mortgage at 6.5% with a 25-year term and 20% down payment to purchase a retail storefront, with monthly payments of $2,700.
Why It Matters for Your Business
Owning commercial property through a mortgage builds equity over time instead of paying rent, but it requires significant capital commitment and carries foreclosure risk.
Related Terms
More Banking Terms
ACH
Automated Clearing House - an electronic network for financial transactions.
APR
Annual Percentage Rate - the yearly cost of borrowing including fees.
APY
Annual Percentage Yield - the real rate of return on savings including compound interest.
Bank Reconciliation
Matching bank statements with internal records to identify discrepancies.
Business Checking
A bank account designed for business transactions.
Related Financial Guides & Resources
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