A commercial mortgage is a specialist type of mortgage that is
aimed at those who are looking to purchase a commercial premises. The
commercial premises may be used to start a new business or simply
an addition to your existing business.
Like with traditional mortgage types the concept of commercial mortgages is virtually the same, you still borrow money from a lender with the intention of paying it back with interest.
Over what term is a commercial mortgage spread?
Again, a commercial mortgage can be spread of a number of years, more than likely this will be no less than 15 years.
What can use a commercial mortgage for?
Most people take out a commercial mortgage to buy a premise for business use. This could be as a result of previous growth or quite simple a new business venture. Commercial mortgages nowadays are used by many for property development projects, residential investments and other commercial investments. It is advisable to discuss your exact use for a commercial mortgage with your lender as they may have specific terms in place depending on what your intentions are.
Can anyone take out a commercial mortgage?
Not exactly, bearing in mind commercial properties can be quite
expensive resulting in increased risk factor for the lender. Therefore,
a lender will make necessary checks on the borrower and will usually
have a set guideline of criteria that they follow.
This will normally involve a level of credit checking to ensure you personally have positive credit rating credentials. In addition, the lender will need to satisfy that the business venture or use of borrowing is worth their while. A commercial mortgage lender may also require supporting documentation such as your business plan and your future forecasting models.
The cost involved with commercial mortgages?
There are usually many associated costs with mortgages and commercial mortgages are not any different. The lender will normally charge you for the application and arrangement fee which is determined by a percentage on the total borrowing. This will depend on lender to lender so it is worth shopping around. Other fees you can be expected to pay are valuation fees, legal and professional fees.
How much can I borrow?
This will really depend on your business case presented. The lender will make judgement on what they deem reasonable and with minimal risk for them. It is not uncommon for the lender to ask you to make financial commitment on your part; they usually apply what is known as a loan-to-value ratio to determine this.
Where can I find a commercial mortgage lender?
Save yourself time and hassle by simply completing our mortgage enquiry form below and we will put you in touch with our FSA regulated mortgage brokers.