interest rates

Compound Interest in Commercial Real Estate

Compound Interest in Commercial Real Estate

Compound Interest, sometimes called "compounding interest", is when interest is added to the principal amount after each period, and the next recurring interest calculation includes the principal along with the accumulated interest. Because of this, Compound interest is often referred to as "interest on interest". As opposed to simple interest, where interest is only calculated using the principal, compound interest can make a sum grow exponentially. 

APR: Annual Percentage Rate in Relation to Commercial Real Estate

APR: Annual Percentage Rate in Relation to Commercial Real Estate

The Annual percentage rate or "APR" is the true interest rate that must be paid for a loan over the course of a year. Used to get a much better idea of the actual cost of a loan, APR is taken as the "true" interest rate because it accounts for all charges the borrower is responsible for

Interest Rate Caps in Commercial Property Loans

Interest Rate Caps in Commercial Property Loans

An interest rate cap is used to limit the risk on a floating rate commercial property loan. A floating rate property loan has a variable interest rate, borrowers usually opt for this type of loan during periods of low-interest rates, because if the interest rate decreases further than the borrower benefits. A floating interest rate can also increase and that may be a huge financial risk if it increases rapidly or by too much. For this reason, borrowers try to cap the amount by which interest on the loan increases.

Fixed Interest Rates and Variable Interest Rates in Commercial Real Estate

Fixed Interest Rates and Variable Interest Rates in Commercial Real Estate

Every loan agreement comes standard with a form of interest that must be paid. Interest rates can be negotiable but usually appear in one of two forms:  Variable or Fixed. A Variable Interest Rate loan has an interest rate on the outstanding balance that rises or falls based on the current status of the market interest rate. On the other hand, a Fixed Interest Rate loan has an interest rate that remains constant for the duration of the agreed loan term.