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When you’re looking for a commercial mortgage, whether that’s to use for your own business, or to rent as in investment, you want to make sure you’re choosing the right solution. There are a vast number of lenders, all with their own policies, appetite and solutions, and so understanding which of these best suits your requirements can be a mind field alone – and that’s even before considering rates, fees and valuations.
As your broker, we take the time to understand your goals first. This allows us to narrow down the market and approach the right lenders for tailored quotes. The question of "what’s the best option?" is too broad. We believe the key is sourcing the right solution that fits your unique circumstances.
Understanding Commercial Mortgages.
Know you need a commercial mortgage but not sure how they work? In a nutshell, A commercial mortgage is a type of loan used to finance the purchase or refinance of a commercial property, such as office buildings, retail spaces, warehouses & hotels. It's like a residential mortgage but specifically for business-related real estate.
A commercial mortgage is typically secured against the property itself. In some cases, it may be required that the borrower provides a debenture and, occasionally, a personal guarantee as additional security.
Key features of a commercial mortgage:
A commercial mortgage is generally secured against the commercial property itself
A typical deposit of 30% is required, bespoke quotes will be provided based on your business and lender policies.
Rates can be fixed, variable, or a combination of both - variable rates tend to follow market movements, often linked to the Bank of England base rate or LIBOR.
Repayments can be structured as capital & interest or interest only
Before a loan is agreed, the lender will typically require an independent property valuation
Lenders will often want to understand your exit strategy (how you plan to repay the loan), particularly if the term is longer or the loan is interest-only
Did you know?
There are variations of commercial mortgages for niche situations too, such as semi-commercial mortgages, for when you are purchasing a commercial property that also has a residential element such as a shop with a flat above it.
Benefits of Commercial Mortgages
Commercial mortgages are a great choice as they come with a host of benefits and advantages, such as:
No financial ‘wastage’ on paying rent for a property owned by someone else
Simplified financial planning thanks to longer repayment terms
A potential profit on your investment if property values increase
No need to worry about complicated long term leasing arrangements
The opportunity to generate rental income
The real key to reaping the benefits of a commercial mortgage is choosing a commercial finance broker that knows how to get you the right solution for your goals.
Let us take the pressure off you
We know that trying to find a mortgage for a commercial property can feel overwhelming, especially with the vast number of lenders offering commercial mortgages and the variations in products available. Let us take the pressure off you. Our team has a comprehensive knowledge of the market - and knows the lenders and products inside out - so we can simplify your search and get you the funds you need.
Get a Commercial Mortgage Estimate.
Commercial Mortgage FAQs
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No, you cannot use a residential mortgage to finance a commercial or mixed-use property. Residential mortgages are specifically designed for properties used as private homes and come with terms and rates that reflect the lower associated risks.
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Sort of. If you own a property which is used for a mixture of commercial and residential purposes, you may be eligible for a semi - commercial mortgage rather than a residential mortgage, as the commercial aspect of the property may require specialist financing.
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No, there are commercial mortgage options for those wishing to buy a commercial or mixed property to rent to a business tenant. Take a look at our buy to let page to find out more about commercial buy to let mortgages.
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The rates given for a commercial mortgage will vary depending on a number of factors, including the amount borrowed, the type of property and business, the financial health of the business and the type of lender used.
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The deposit needed for a commercial mortgage will vary on a number of factors, including the property and business type, your financial situation and the type of lender. The average deposit amount is around 30%.
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Yes, you may still be eligible for a commercial mortgage if you have a bad credit rating. However, there may be a more limited range of products available to you and the terms may be stricter. Working with a financial broker can help you find the best deal for your situation.
Not sure if you need a commercial mortgage?
If you’re not sure that a commercial mortgage is the right choice for your current situation, there might be better options out there. Maybe a bridging or business loan feels like a better fit? Or could releasing equity from another property in your portfolio work better?
Why not explore some of the other finance solutions available.
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