Uk Commercial Mortgages
Commercial mortgages
What are commercial mortgages?
- the most popular type of mortgage used to buy buildings and land for business purposes
- they are offered to start-ups, small to medium busineses and large businesses
- the lender holds the legal rights over the business property/land until the loan is fully paid.
Why do I need a commercial mortgage?
It could be that you need:
- to expand or
- more storage space or
- to buy your own office premises.
These mortgages are ideal for helping you break free of restrictive lease agreements and buy space more suited to your budget and business.
But they can also give you money to:
- buy an existing business
- buy your business space
- invest in either commercial or residential property and develop property on commercial/residential basis or
- release equity held in commercial property.
What are the benefits of commercial mortgages?
- they can give your business a large asset which is likely to increase in value
- the loan repayments involved can be similar to your current rental costs so you won't need to adjust your budget (this can depend on the mortgage)
- mortgage interest payments are tax-deductible and
- if the lender agrees, you might be able to sub-let some of the business space.
They can also help you:
- increase your working capital or give quick cash flow
- keep up with expensive short period loans
- build earning potential by improving, expanding or fitting out your business space
- cut the costs of an existing commercial mortgage you may have
- reduce reliance on one lender for commercial banking and property investment purposes.
What are the disadvantages of commercial mortgages?
- When you sign a commercial mortgage contract you are committing to a period of 10 to 30 years. It's a big commitment.
If you fail to make repayments on time you may have to pay additional interest and, if this happens repeatedly, the property can be repossessed.