Land and its appurtenances (attachments such as buildings or other structures or improvements) is called Real Estate or Real Property & the loan on real estate that is usually secured by a mortgage is called Real Estate Loan.

If your business is considering the purchase of a new building, your first home, a vacation home, refinancing existing business real estate properties, or purchasing facilities currently leased, Real Estate Loan may be the solution for you. 

When you first decide that you want to buy a real property whether its is your first home, a vacation home, or refinancing, start planning your financial strategy . You will need to do some or all of the following:

• Get your financial house in order.
• Determine how much you can afford to pay for a home.
• Get pre-approved for your loan.

Types of real estate loan: There are 2 basic types of real estate loan.

1. Commercial Real Estate Loan: This loan can be used to buy, improve or refinance commercial property, if you own 50% or more of the real estate. National standards require a commercial loan for any property with more than four units. This loan can be used to buy, improve or refinance commercial property.
Commercial real estate loans are available on all types of income producing and commercial properties, including Shopping centers, Motels and apartments, Office buildings, Automobile dealerships, Health care facilities, Owner occupied buildings, Manufacturing facilities and more. 

2. Residential Real Estate Loan: This loan can be used to buy, improve or refinance residential property. New investors stick to residential loans when making their first property investment. After that, they might consider diving into a larger building requiring a commercial loan.

Real estate loan formula: A real estate loan is based on a mathematical formula which is easy to run on a financial calculator, but too difficult to figure out on paper. The five main elements of the loan formula are the same as the five keys on a financial calculator. These are:

• Interest Rate
• Term
• Payment
• Final value
• Principal

These elements mathematically interrelated. When you change the value of one element, it automatically alters the value of one or more other elements in surprising and unexpected ways. The time value of money is a powerful concept. It allows the borrower to go into debt just as effectively as it helps the investor build wealth.

Like, if you want to make lower monthly payments, you can do one (or all) of four things – increase the term of the loan, lower the interest rate, lower the principal amount or reserve a final payment at the end of the loan term.

Methods of raising real estate finance: 

They are based on creating an interest to the lender in the real property. The lender should be able to obtain an income without having to occupy the property. 

1. Joint Venture And Equity Partnership: Owner can offer a share to the investor from the returns viz; rent or yield of the property or profit from sale of the property.

2. Mortgage Loan Against Property: Owner can use the property as security for a loan; i.e. lender holds the property by mortgage, earning an interest at particular rate on the value of the loan.

3. Sale Or Lease-Back Arrangement: Owner leases the property to lender who recovers funds from returns and hands over property to owner. In another similar arrangement, owner sells the property to lender for an advance loan and balancing payment at later date.