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Commercial Mortgage for Business: Everything You Need to Know

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If you’re a business looking to buy or refinance UK property, you’ll need to consider property finance deals. Commercial mortgages are a popular option for businesses that need security to reduce potential risks. A business mortgage typically lasts from three to 25 years, and you can usually find a 70-75% mortgage.

How to Get a Commercial Mortgage For Business

What is a Commercial Mortgage For Business

A commercial mortgage is a loan that is secured on a non-residential property. It is typically used to purchase, refinance, refurbish or develop a property for business purposes. The terms offered by lenders for commercial mortgages range from 3 to 30 years.

What Types of Commercial Mortgage Exits

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

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 for an owner-occupier mortgage.

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% Loan to Value for a commercial investment mortgage.

Where a Commercial Mortgage can be used

Commercial mortgages may be used for mixed-use (residential and commercial) property, buy-to-let property, and development of a business-owned property.

What Are the Requirements for a Commercial Mortgage

Typically, borrowers will have to meet certain criteria before securing a commercial mortgage. These include:

Your 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.

acceptable Security

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

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

How Can I Apply For a Commercial Mortgage for Business

If you need a commercial mortgage, it is advisable to contact a professional broker. 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 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.

Frequently Asked Questions

Who are the top commercial mortgage lenders in the UK?

There are many commercial mortgage lenders in the UK, but some of the top lenders include Lloyds Bank, Barclays, HSBC, Santander, and NatWest. These lenders offer a range of commercial mortgage products to suit different business needs.

How do commercial mortgage rates compare among lenders?

Commercial mortgage rates can vary significantly among lenders. The rates depend on various factors such as the loan amount, property type, loan term, and the borrower’s creditworthiness. It is essential to compare rates from different lenders to find the best deal.

What factors affect commercial mortgage rates?

Several factors can impact commercial mortgage rates, including the loan amount, loan term, property type, location, borrower’s creditworthiness, and the current economic conditions. Generally, the higher the loan amount and the longer the loan term, the higher the interest rate.

What is the process for obtaining a commercial mortgage?

The process for obtaining a commercial mortgage involves several steps. First, the borrower needs to complete an application and provide supporting documents such as financial statements, business plan, and property details. The lender will then review the application and conduct a valuation of the property. If approved, the lender will provide a loan offer, which the borrower can accept or negotiate. Once the terms are agreed upon, the loan will be disbursed.

What are the benefits of using a commercial mortgage broker?

Using a commercial mortgage broker can offer several benefits, including access to a range of lenders, expert advice on the best loan products, and assistance with the application process. Brokers can also negotiate on behalf of the borrower to secure the best deal and save time and effort.

What types of businesses are eligible for commercial mortgages?

Most types of businesses are eligible for commercial mortgages, including sole traders, partnerships, limited liability companies, and corporations. The eligibility criteria may vary among lenders, but generally, the borrower needs to demonstrate a stable income and a good credit history to qualify for a commercial mortgage.

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** 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.