Commercial Buy to Let Mortgages
Use it to purchase or refinance a commercial investment property
Ready to go?
Apply in 3 minutes. One of our Property Finance Specialists will then guide you through your options.
Commercial Buy to Let Mortgages
Use it to purchase or refinance a commercial investment property
Ready to go?
Apply in 3 minutes. One of our Property Finance Specialists will then guide you through your options.
Loan Amount
£100k+
Loan Term
Up to 25 Years
Time to Funds
As Little as 30 Days
Interest Rate
From 2.3%
A commercial buy to let mortgage to help you build your investment portfolio
Investing in commercial or semi-commercial property can be a great investment. As you’ll know, every situation is unique which is why there is a commercial buy to let mortgage to match every circumstance.
Commercial Buy To Let Mortgages: What You Need to Know
A commercial buy to let mortgage is a particular type of business loan, where the funds lent are secured against a commercial property. If you plan for your business to trade from the property then you’ll need a commercial mortgage, and if the plan is to let this out to a third party tenant then you’ll need a commercial buy to let mortgage (also know as a commercial investment loan). The mortgage can be used to purchase the property, to refinance an existing mortgage, or to release equity from the property.
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What is a Commercial Buy To Let Mortgage?
A commercial buy to let mortgage is a loan where the debt is secured via a business property. The property will be rented out to a commercial tenant with a suitable lease and it’s this rental income which will repay the mortgage each month.
Commercial mortages can be taken out directly in the business name (whether you’re a sole trader, partnership or Limited Company), or it can be taken out under another entity. For example, we often help property investors buy properties in Special Purpose Vehicles (SPVs), which is typically a Limited Company specifically created to buy the property.
Want some advice?
Talk to one of our Property Finance Specialists. We’re on hand to take you through the options available.
How does a Commercial Buy To Let Mortgage work?
Lenders will need to verify that the rental income is sufficient to meet the monthly mortgage repayments, along with assessing you as a property investor against their specific criteria. Often lenders will be cautious about lending to inexperienced investors. Once approved, they’ll send a valuer out to confirm the value of the building and then their solicitors will set about the legal work.
Do I qualify for a Commercial Buy To Let Mortgage?
Commercial buy to let mortgages aren’t available to any would-be investor. All lenders have a strict set of criteria that a property investor must meet in order to be considered for such a loan. The list of eligibility checks that lenders use to decide whether or not to lend include assessments of the property type, demand, tenant and length of lease.
Lenders will be happier lending to experienced investors who can demonstrate that they successfully own and manage other commercial investment properties. This is because owning commercial investment properties is typically more complex than with residential properties.
Lenders will have more or less appetite to lend depending on the type of property. You’ll see this play out as lenders offer higher loan to values for sectors they like, and lower loan to values for sectors they are more cautious about.
The strength of tenant has a significant impact on how a lender views an application. A start-up tenant won’t be particularly favoured, while a long-established tenant with a track record will be welcomed.
Lastly, the existing or proposed lease will be pivotal. Negotiate a longer lease with no break clauses and you’ll be in a stronger position raising finance. Short leases, or tenant break clauses, can cause some issues.
How much can I borrow?
Use our calculators to work out what a business loan will cost you as well as how much a lender may be willing to lender to you.
How much deposit do I need for a Commercial Buy To Let Mortgage?
Commercial buy to let mortgages require a hefty deposit, and that should be a major consideration before the mortgage hunt begins. The amount that you’ll need varies, depending on what the lender thinks you’ll be able to afford, and what type of property you’re hoping to buy.
Usually a commercial buy to let mortgage deposit will fall between 25% and 50% of the overall purchase price. Of course, many investors hope to pay the smallest possible deposit, so it’s well worth shopping around to establish the amount that different lenders are able to offer. In some cases you may be able to fund the entire purchase price by offering a second property as security to a lender.
How quickly can I get a Commercial Buy To Let Mortgage?
Arranging a commercial buy to let mortgage is a complicated business, and as you might expect there’s a fair amount of paperwork involved. We’re often asked how long it takes to arrange a commercial buy to let mortgage, but there’s no simple answer to this one.
