If you own a business or want to grow your brand, then you may be interested in a commercial mortgage.
Commercial mortgages are a form of a business loan secured against the value of any property that is not your residential address and can be used to buy commercial property.
Typically, commercial mortgages take over where business loans end to help you buy business property without interfering with cash flow.
There are many reasons why you may be considering a commercial mortgage, whether you are looking for a new storefront for your business or want to rent out a property and are now considering where to borrow money from.
Why Use Us?
We are an accredited business finance company who have over 10 years in the commercial mortgage finance industry.
As specialist lenders, we have a lot of experience in the field and continue to be a leading provider of business mortgage loans in the UK.
Our company is highly competitive with our services and rates because of our experience.
Our team understands the business mortgage industry very well and has great relationships with both lenders and clients alike due to this.
With so many connections, we can help our clients cover the purchase price and additional fees, including arrangement fees and legal fees, for any commercial property by working with multiple lenders.
Regardless of the kind of business premises you are looking to buy, we can find the best deal for you.
Working with high street banks to commercial lenders, our company can provide a range of business mortgages to you.
Regardless of the type of mortgage term you are interested in, our company makes it easy for you to get the money to cover both the deposit and the purchase price.
Unlike residential mortgages, most commercial mortgages cannot be taken out without a high deposit upfront.
This is because there is a higher risk involved than with residential properties, and it can make it more difficult for companies to get a loan for the total value of their premises.
With a great understanding of the key features of all commercial mortgage types, we will pair you with a suitable lender to aid in business growth.
Types of Commercial Mortgages
There are two main types of business mortgages that you can apply for with a specialist broker like our company. These are owner-occupied mortgages and commercial investment mortgages.
To help you determine what kind of commercial mortgages you need and, therefore, the most suitable lender for your business, you need to understand the different types available.
Owner Occupied Mortgage
Owner-occupied mortgages are used to purchase property that will be used as trading premises for your business.
With this kind of loan, you can pay for either the existing property owned by your business or to buy new premises that your company will move into.
There are a few reasons why you may be wanting to move premises, such as aiding business growth, attracting new customers, or even relocating the business.
Commercial Investment Mortgage
Commercial investment mortgages are used on properties as an investment, such as a property that you are planning to let out.
These loans may also be referred to as buy-to-let mortgages because they are being used to purchase a buy-to-let property.
A buy-to-let mortgage may be used to purchase semi-commercial, residential, or mixed-use property, such as flats above the shop floor.
Before you can apply for a commercial mortgage, you first need to determine what kind of loan you require.
We offer a professional valuation to aid with this, but the eligibility criteria for each commercial mortgage include the following:
- Budget available.
- The kind of property you want or own.
- What your business is and its trading history.
You can use our commercial mortgage calculator to determine how much you can afford in monthly repayments based on your credit history and maximum loan-to-value (LTV)
As a specialist lender, we offer all types of commercial mortgages and can get you the best mortgage term for your needs. Contact us today to learn more about how we can help you.
Commercial Mortgage Rates
The average interest rate for commercial mortgages is between 2.25% to 12%.
This is a much higher rate than the ones used to buy a residential property because of the higher risk associated with business loans.
The mortgage rates will impact how much is required for the monthly repayment of this loan and, therefore, whether you can afford it.
As well as considering the loan-to-value amount offered within a business loan, you also have to consider commercial mortgage interest rates and other fees.
Several factors will impact your monthly payments and how much the fees are within your business mortgage, including the following:
- Size of the loan (as required by the client)
- Type of lender and their payment structures
- The loan-to-value LTV ratio
- The length and quality of the tenant's lease (for buy-to-let mortgages)
- Your credit history
- Cash flow and strength of the businesses finances
The loan-to-value ratio is a risk assessment for any kind of mortgage and tends to be higher with business loans.
When it comes to interest rates for commercial mortgages, compared to any other regular business loans, the amount you pay will vary based on the type you choose.
The are two main types of mortgages, based on the interest rates you want to pay:
For fixed rate mortgages, interest rates will remain the same throughout the mortgage term.
The interest rate is based on the property value, the loan agreements, and the current financial climate.
With fixed-rate mortgages, the initial interest rate is high but will remain the same for longer.
Variable Interest Rate Mortgage
Mortgages with variable interest rates mean that what you pay will fluctuate. This is based on the Bank of England base rate for loans taken out in the UK, which is reviewed monthly.
Capital repayment holidays may also be part of your mortgage term if this is the best deal for you.
What Fees are Involved with Commercial Mortgages?
There are several kinds of fees associated with commercial mortgages, including:
An arrangement fee is a way of paying the mortgage lender for arranging your loan. The total for the arrangement fee will be added to your total loan, with the average costs being 0.75% to 2% based on the loan amount.
Valuation fees are used to pay for a valuator to visit the property and assess what it is worth.
This occurs at any time you want to buy property, whether this is business premises or otherwise, and determines how much you need to borrow.
A similar process is done if you want to release equity against a property.
In terms of buying a property, valuators are required to determine how much you will pay for the business premises and what is needed to be loaned.
For businesses, this is commonly more expensive compared to residential mortgages because of the varying factors that need to be taken into consideration.
Legal fees are used to pay for the solicitor who will help you apply for a commercial mortgage and get your business property.
You not only need to pay your solicitors when you buy property but also the lenders as well.
Broker fees are paid to the financial company that helps you find the best deal for your business mortgage and can aid your application.
Commercial Mortgage Calculator
A commercial mortgage calculator is a great tool that can be used to help your business determine how much you can loan and what you can afford based on your needs.
Based on your credit history, bank statements, and business cash flow, this tool is used to help find the best deal for your needs.
Contact us today for more information.
Benefits of a Commercial Mortgage
There are many benefits to taking out a commercial mortgage, including the following:
- Lower interest rates than other loans, all of which are tax deducible with mortgages.
- Allows you to buy a new property, such as buy-to-let premises.
- Can support the development of existing properties.
- Aid business growth.
- Support commercial projects, including the development of the brand, location, or current facilities.
- Help business owners acquire land.
If you are interested in expanding your business, please contact us today for more information.
Commercial Mortgage Broker in
We are a specialist commercial mortgage broker that has helped hundreds of clients expand their businesses.
Our company operates across the UK and has helped many businesses over the years.
As a broker, we help our clients get the best deal for their commercial mortgages and pair them with specialist lenders.
We do not loan the money to clients but instead pair them with companies and lenders.
We aim to make the process easier for our clients to manage. If you would like to work with us, then please do not hesitate to contact the team today.
What is a Commercial Mortgage?
Commercial mortgages operate somewhat similarly to private loans – though it is largely seen as the next stage up from an unsecured business loan.
These types of mortgage are also sought after by certain developers who are interested in providing properties to commercial bodies and chains – meaning that there is much interest in mortgage comparison so that the best deals can always be sought out and negotiated upon.
What is a Commercial Mortgage Used for?
Commercial mortgages are used when business loans have finished. While for most loans, you can borrow up to £25,000 unsecured, a personal guarantee is required for more which is where commercial mortgages come in.
For these kinds of loans, personal guarantees are business property and can be used to buy property, make improvements, or aid other areas of business growth.
Commercial mortgages can last up to 25 years and can cover between 70% and 75% of all mortgages.
However, this kind of loan requires a high deposit of between 25% and 50% of the total value.
The loan-to-value ratio is the amount you can borrow based on what has been paid in the deposit.
Commercial mortgages can be used to purchase property for your business and new business endeavours, including stock, rental properties, and essential equipment.
Key features of a commercial mortgage include the large amounts that can be borrowed by businesses.
How to get a Commercial Mortgage
Working with a specialist broker like us is the easiest way to apply for a commercial mortgage.
We can make your application process easy and offer support throughout every stage.
To apply for a commercial loan, the following needs to be completed:
- Fill out a commercial mortgage application form.
- Provide proof of identity, income, and address.
- File an assets and liabilities statement.
- Provide two months or more of bank statements.
- Provide three years of audited certified financial accounts for the business.
- File details of the property and business premises.
- Provide details of tenancy or leasing agreement (if this applies).
- Provide a business plan as proof of monthly payments.
These are all required to support your application and ensure you can make the repayments of your mortgage.
"We are very happy with the support received from this company and would recommend them to anyone who is needing help with lending money for their business"
"These brokers were very knowledgeable and friendly, as nothing was too much trouble for them during our application"
"Our broker helped us get the dream property for our business and we are seeing continued success since. Thank you so much for all your help!"
Frequently Asked Questions
What are the Monthly Payments for Commercial Mortgages?
The monthly repayment required for your loan will vary based on how much you have borrowed, the lender you are working with and the fees attached to this.
How do Mortgages Work on Commercial Property?
A specialist mortgage term is required to buy property used by your business and is taken out to help pay for the higher deposits, fees, and monthly payments.
How Much Deposit is Needed for Commercial Property?
Most commercial properties require a deposit of between 25% and 50%.
What are Commercial Mortgages Based on?
These loans are based on the value of the property that is not for residential use, such as business premises.
Are Business Mortgages Regulated?
Business mortgages are not regulated by a statutory body.
What is a Semi-Commercial Mortgage?
This is the loan used for a property that is used in part for commercial purposes but may also have residential areas such as flats above a shop.
Are Commercial Mortgages more Expensive?
Yes, these loans are more expensive than residential mortgages due to the high-risk factor of commercial properties.
How Many Years is a Commercial Mortgage?
On average, these mortgages can last up to 25 years.
Can I Claim Tax Relief on a Commercial Mortgage?
Interest rates associated with your business mortgage are tax deductible.
We are a leading commercial mortgage broker that can help businesses across the UK grow.
We can help you get a commercial mortgage by pairing you with the best lenders and ensuring the best deal for you.
Business mortgages are loans taken against the value of the property, and we can help your business in this process.
Please contact us today to learn more and to apply for business loans with us.
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