Commercial mortgages

Commercial Mortgages

Use it to buy, build, expand, remodel, or even refinance.

Let's get started.

Commercial Mortgages

Use it to buy, build, expand, remodel, or even refinance.

Let's get started.

Loan Amount

£100k-£5,000,000

Loan Term

Up to 25 Years

Time to Funds

As Little as 30 Days

Interest Rate

From 2.5%

A commercial mortgage could be the foundation of your small business.

Investing in your business premises is a great way to build long-term value for your future. By taking out a commercial mortgage you can go from paying rent for someone else’s property, to building equity in your own asset.

A commercial mortgage could be the foundation of your small business.

Commercial Mortgages: What You Need to Know

A commercial mortgage is a particular type of business loan, where the funds lent are secured against a commercial property. These mortgages can be secured against investment properties, in the case of buy to lets, or commercial properties intended to serve as your own business premises. The mortgage can be used to purchase the property, to refinance an existing mortgage, or to release equity from the property.

There are many different types of commercial mortgages, with varying degrees of complexity. But if you’re new to the world of commercial mortgages, have no fear. We’re here to guide you through what can sometimes be a puzzling topic, and give you a helping hand to get that mortgage up and running.

What is a commercial mortgage loan?

A commercial mortgage loan is a mortgage, where the debt is secured via a business property. The property may be the very heart of a business’s headquarters, or it could be a premises which is rented out in order to bring in another income for the organisation.

If you’re wondering what the difference is between a residential and a commercial mortgage, the answer lies in the property itself. Residential mortgages are loans taken out by a single person or family, to purchase a property to live in. On the other hand, commercial mortgages are loans taken out by businesses or landlords, in order to purchase property which will boost their business.

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 directors buy a property in their personal name and then let it to their Limited Company.

How does a commercial mortgage work?

Like residential mortgages, commercial mortgages tend to be quite long term. Typically, they span between three and 25 years. For businesses, they are an attractive alternative to renting, and they can help to release much-needed capital which can be invested back into a company.

Lenders will need to verify that the business can afford to meet the monthly mortgage repayments, along with assessing your business against their specific criteria. 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.

How much deposit do I need?

Commercial 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 mortgage deposit will fall between 20% and 40% of the overall purchase price. Of course, many businesses 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.

Do I qualify for a commercial mortgage?

Commercial mortgages aren’t available to any business that wants one. All lenders have a strict set of criteria that a company 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 a company’s finances, debts and cash flow.

Lenders will calculate a projected income for a company, and consider whether or not they believe that a company will be able to repay their debt. If a premises is to be rented out, then expected rental income will be taken into account at this stage. Following eligibility checks, a lender might adjust the required deposit before proceeding.

Typically you’ll be eligible for a commercial mortgage if you’ve been trading for more than 2 years, you have a sufficient deposit saved and you can show a track record of making profit.

For an indication of how much you could afford to repay use our Affordability Calculator:

How quickly can I get a commercial mortgage?

Arranging a commercial 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 mortgage, but there’s no simple answer to this one.

If you, your lender and your solicitor pull out all the stops and arrange everything as quickly and efficiently as you possibly can, you’ll likely be looking at a time frame of 4 to 8 weeks. Of course, more complex mortgages can often take far longer than this.

Make sure everything runs smoothly by ensuring clear, fast communication with your lender, and keep all your paperwork to hand to help the process along. Using an experienced broker can really help to keep everyone moving and deal with any hiccups along the way.

Need a hand sorting out a business loan for your company? Talk to us. Our team of experts
know all there is to know about commercial mortgages, and we’re on hand to take you
through the options available. Apply today to find out what’s on offer.