How do commercial mortgages work
Why a Commercial Mortgage Would Work for Your Business
Buying a property for business purposes can make very shrewd business sense. Many commercial loans are given on the basis that the property is used as security against the loan. However many commercial loans charge interest at a higher rate than a commercial mortgage. So by remortgaging existing commercial premises or buying a property specifically for your business, you can save a lot of money.
Mortgages are seen as a means to purchase property. In fact this is only true in the residential property market. In commercial terms, raising money through a mortgage is a very cost effective way of injecting cash into your business without having to sell a part of your business to an outside concern.
Whether you are looking for a business loan or a mortgage, lenders will want collateral for their money. A commercial premises owned by your company will be the biggest asset that can be used as collateral, and may protect your own residential home from being used as security. Because the value of your property reduces the risk the lender is taking, a commercial mortgage can be the least expensive form of business finance available to many small or medium sized businesses.
By choosing to take out a commercial mortgage, you can raise more money than if you were to take out a business loan. Loans will be for smaller amounts with higher interest rates over a shorter period of time. A mortgage will raise
more money with a lower rate of interest over a longer time frame ensuring smaller monthly repayments.
If you are a small business owner then you may not fit the traditional 'one size fits all' mould when trying to obtain a commercial mortgage from the high street. Many banks require three year’s audited accounts before they will consider a mortgage application. If you have a small business which falls below the audited accounts threshold, or a seasonal business then you may be automatically turned down for finance.
This is why we treat every business as an individual case and simply ask how you will fund each monthly mortgage payment. In this way, we can make our products fit your criteria, instead of trying to fit you into an inflexible mould.
More Commercial Mortgage Topics:
- Would It Work? - why a commercial mortgage would work for your business
- Use and Benefits - weigh up the pros and cons
- Who Can Get One? - who can take out a commercial mortgage?
- Bad Credit History - don't let credit history stop you
- Self Certification - make sure you have the right documents
- Property Types - property types that we allow
- Our Commercial Mortgages - how our mortgages work
- Interest Rates - understand interest rates with some examples
- Security - make sure you're secure
- Fees - understanding confusing legal fees
- Filling in an Application Form - don't worry they're easy - learn here