Commercial mortgages, sometimes referred to as business mortgages are mainly for business owners who are looking to buy property or land for commercial use.
At some points, many grown businesses usually look for a new workspace or look to expand beyond their existing business property. It can often be the right course of action for business owners who are looking to avoid increasing rents, or maintenance and management fees. Due to the sheer variation of land and premises, commercial mortgages tend not to be pre-set products in the same way that residential mortgages are, although they do stick to the pan-European Mortgage Credit Directive, which covers both residential and commercial mortgages.
As a commercial mortgage is any loan secured on property which is not your residence, buy-to-let mortgages are a special type of commercial mortgage as well. If you’re planning on buying a property to rent out for extra income, you’ll need a commercial mortgage.
Types of commercial mortgages:
There are a number of commercial mortgage types available, depending on your requirements. These are:
The duration of a commercial agreement can run from 3 to 25 years. While the interest rates on commercial mortgages will often be greater than those on residential properties, they still offer better value for money than more conventional business loans.
Understanding the challenges presented in securing a commercial property mortgage requires working with a mortgage adviser that will provide answers to any issues you may have. At Robi Finance Ltd, we can provide you with everything you need to make a considered decision, helping complete all the necessary documentation to support the success of your application.
How can I get a commercial mortgage?
There are many different options available, depending on your lender. Finding a commercial mortgage can take a bit of time and detailed research, but you should find a lender that meets your particular needs. A mortgage broker can help at this stage.
Before you start your search, remember that you’ll need certain documents in order to apply successfully. Check that you have:
What are commercial mortgage terms?
Terms can vary. Some repayment plans have three-year terms, while others may offer a term of 25 years; the average is around 15 years.
Terms are often dictated by the size and value of the property, or the available deposit you have, with many lenders offering commercial mortgages at a variable rate.
You’ll need to watch out for complex clauses or directives where there are greater risks to the borrower – if you have any doubts or you’re unsure of the contract wording, your mortgage broker will be able to help.
How much deposit do you need for a commercial mortgage?
Deposits can vary, but commercial mortgage deposits tend to be around 30% of the property value. The type of business you run can also affect your deposit. Some lenders may ask for more money if they consider your business to be more ‘high risk’ – for example, if it’s a restaurant or a bar.
What is a semi-commercial mortgage?
A semi-commercial mortgage is a mortgage for a property that is half business and half residential, such as a flat above a shop or pub, or part-converted offices and flats. These types of properties often fall outside standard residential or commercial mortgage lender terms, so they need a unique mortgage product.
Rates vary, but lenders tend to favour applicants who have experience in running or letting commercial properties. People who have owned more than one buy-to-let property for a minimum of two years also tend to be given good deals.
Robi Finance Ltd
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The company is registered under Reg No:14639627 in England and Wales.
Robi Finance Ltd is registered with the Information Commissioner’s Office under registration reference: ZB477056 Copyright © 2021. All Rights Reserved.
Robi Finance Ltd is an Appointed Representative of Connect IFA Limited 441505 which is Authorised and Regulated by the Financial Conduct Authority and is entered on the financial services register (https://register.fca.org.uk/s/) under reference 995310.
The FCA does not regulate some forms of Business Buy to Let Mortgages and Commercial Mortgages to Limited Companies.
Not all services we offer are covered by the Financial Conduct Authority.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
The information, advice and/or guidance contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.
A fee will be payable for arranging your mortgage with Robi Finance Ltd. The amount of the fee will depend upon your circumstances. Your consultant will confirm the amount before you choose to proceed but we estimate it to be around 0.65% (min £499). The initial consultation is free.
Commission Disclosure: We are a credit broker and not a lender. We have access to an extensive range of lenders. Once we have assessed your needs, we will recommend a lender(s) that provides suitable products to meet your personal circumstances and requirements, though you are not obliged to take our advice or recommendation. Whichever lender we introduce you to, we will typically receive a commission from them after the completion of the transaction. The amount of commission we receive will normally be a fixed percentage of the amount you borrow from the lender. Commission paid to us may vary in amount depending on the lender and product. The lenders we work with pay commissions at different rates. However, the amount of commission that we receive from a lender does not have an effect on the amount that you pay to that lender under your credit agreement.
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