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Commercial Mortgage for First Time Buyers: A Guide to Securing Your First Property

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Considering purchasing or refinancing property in the UK? It’s essential to explore your financing alternatives. We are a premier mortgage brokerage specializing in delivering top-tier commercial mortgage solutions for individuals, limited companies, SPVs, and offshore entities. Financing up to 75% Loan To Value (or 100% with extra security), and a vast array of property types ranging from residential to commercial venues like retail stores, eateries, bed and breakfasts, offices, industrial spaces, HMOs, care facilities, investment properties, development plots, and buy-to-let properties.

Whether you’re stepping into the property market for the first time or are a seasoned investor, our expertise is here to guide your financing journey. We are committed to delivering prompt and outstanding service, with options for same-day principle agreements and interest roll-ups.


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How to Get a Commercial Mortgage as a First Time Buyer

Commercial Mortgages

A commercial mortgage is a loan that is secured against a non-residential property. This type of mortgage is generally used to purchase, refinance, refurbish or develop a property that is used for business purposes. Commercial mortgage terms can range from 3 to 30 years.

Commercial Mortgage Types

Commercial mortgage lenders offer different rates depending on the type of commercial mortgage. There are two main types of commercial mortgages:

What is Owner-occupier commercial mortgages

These are often used by business owners for remortgaging or purchasing commercial owner-occupied premises, such as office space. Commercial mortgage lenders generally provide up to 75% Loan to Value (LTV) for an owner-occupier mortgage.

For example, a business that owns a factory may need to secure an owner-occupier mortgage with another lender to repay their existing finance.

WHAT IS Commercial investment mortgages

These are often used by those looking to invest in commercial property, such as a house in multiple occupation (HMO). Lenders usually provide up to 65% LTV for a commercial investment mortgage.

For example, a landlord may need to refinance their buy-to-let property to stabilise their finances. They can approach a lender and secure a 10-year interest-only commercial investment mortgage, which ensures they can refinance their buy-to-let property.

What is the use case for Commercial Mortgages?

Commercial mortgages can be used for a variety of purposes, including:

  • Mixed-use (residential and commercial) property
  • Buy-to-let property
  • Development of a business-owned property

Commercial Mortgage Requirements

To secure a commercial mortgage, borrowers will typically need to meet certain criteria. These include:

Credit history/Trading history/business Profit and loss accounts

To access commercial finance, borrowers will have to provide certain documentation such as their credit history, business accounts or profit and loss accounts to the lender. This enables the lender to make an informed decision and assess the likelihood that the commercial mortgage will be repaid.

Security types

Commercial lenders will use a non-residential property as security for the commercial mortgage. This is to ensure that the lender has a course of action in the event that the borrower cannot afford the commercial mortgage repayments.

Deposit level

To secure commercial finance, the borrower will typically need a deposit of up to 30%. This is unlike residential mortgages, which generally require a deposit of 10%.

How to apply for a Commercial Mortgage as a for First Time Buyer?

If you need a commercial mortgage, it is advisable to contact a professional broker unless you have an in-depth knowledge of the financial services industry. As a specialist property finance broker,we can provide a clear picture of the mortgages available to you. They will assess your specific set of circumstances and arrange a mortgage solution tailored to your needs.

To get a commercial mortgage, you will need to provide proof of identity, a business plan, and proof of income. Mortgage lenders will assess your eligibility based on your credit history, the value of the property, and the loan amount. You will also need to pay a valuation fee and an arrangement fee.

Mortgage repayments can be made on an interest-only or capital repayment basis. Stamp duty may also be payable on commercial property purchases.

In summary, a commercial mortgage is a loan secured against a non-residential property. Commercial mortgages can be used for a variety of purposes, including mixed-use property, buy-to-let property, and development of a business-owned property. Borrowers will need to meet certain criteria, including providing documentation such as credit history, business accounts or profit and loss accounts to the lender, and providing a deposit of up to 30%. To get a commercial mortgage, it is advisable to contact a professional broker who can provide tailored advice and arrange a mortgage solution that meets your specific needs.

Frequently Asked Questions

What are the eligibility requirements for a first-time buyer to qualify for a commercial mortgage?

To qualify for a commercial mortgage as a first-time buyer, you must meet the lender’s eligibility criteria. This typically includes having a good credit score, a solid business plan, and a down payment of at least 20% of the property’s value. Additionally, the lender may require you to have a certain level of business experience and a stable source of income.

What is the average down payment required for a commercial mortgage?

The down payment required for a commercial mortgage varies depending on the lender and the property’s value. However, most lenders require a down payment of at least 20% of the property’s value. Some lenders may require a higher down payment, depending on the borrower’s creditworthiness and the property’s risk level.

How do commercial mortgage rates compare to residential mortgage rates?

Commercial mortgage rates are typically higher than residential mortgage rates due to the increased risk associated with commercial properties. The interest rates for commercial mortgages are determined based on the borrower’s creditworthiness, the property’s value, and the loan term. The interest rates for residential mortgages are typically lower as they are secured against the borrower’s primary residence.

What are the different types of commercial mortgages available to first-time buyers?

There are several types of commercial mortgages available to first-time buyers, including fixed-rate, variable-rate. Fixed-rate mortgages have a set interest rate for the loan term, while variable-rate mortgages have a fluctuating interest rate.

Which commercial mortgage lenders offer the best rates and terms for first-time buyers?

The best commercial mortgage lenders for first-time buyers depend on the borrower’s financial situation and the property’s value. It is recommended to compare rates and terms from multiple lenders to find the best deal. Some lenders that offer competitive rates and terms for first-time buyers include high street banks, online lenders, and specialist commercial mortgage brokers.

Can a new business with no credit history get approved for a commercial mortgage?

It can be challenging for a new business with no credit history to get approved for a commercial mortgage. However, some lenders may consider other factors such as the borrower’s business plan, cash flow projections, and personal credit score. It is recommended to work with a specialist commercial mortgage broker who can help find lenders that are willing to work with new businesses.

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Legal Information & Disclaimer

This site is an information only site. All of our articles are written by authorised mortgage brokers for the only aim of providing great, useful, mortgage and loan related information. We intent to offer the best possible suggestions and guides however can’t always guarantee to be perfect, please use the information at your own risk. We can’t accept responsibility if things go wrong. Please contact us via our contact page if you see anything that requires changing and we will do so as soon as possible.

The articles on our site do not provide financial advice. Instead, they aim to equip you with the necessary information to attain your mortgage objectives. 

** The content provided in this page is correct at the time of writing. Mortgage and loan lender’s qualifying criteria and rules change frequently so speak to an adviser to confirm the most up to date rules and criteria. The content on the website is not specific advice to each reader, and does not constitute financial recommendations.