Commercial Mortgages
A commercial mortgage is different from a residential mortgage in that the property used as security is a commercial premises, such as an office building, retail unit, or industrial space. This type of mortgage is typically suited for individuals or companies looking to invest in commercial property with the intention of generating rental income or long-term capital growth. It’s also ideal for business owners who want to purchase their own business premises or release equity from an existing property to raise funds for expansion, renovation, or other operational needs. Whether you’re an investor or a trading business, a commercial mortgage can provide a flexible and strategic financing solution tailored to your goals.
COMMERCIAL MORTGGAES
The One That’s Right for You
Depending on Your Reasons For Purchasing A Commercial Property, One of the Following Will Be Right For You
Commercial Buy To Let
Typically purchased by investors who are expecting a return in the form of rental income/capital appreciation.
Maximum loan is based on achievable rental income
Some buildings have and accomodation element which can also be used to generate rental income
International buyers are also eligible for mortgages to enable them to make the purchase
Deposit required is usually around 75% of the property value
Includes Buildings such as Retail, Office Space, Warehouses
Stamp Duty Rates are different from commercial property when compared to residential
Commercial For (Business) Owner Occupation
Purchased by Business Owners who will be using to carry for the purposes of conducting their business.
Purchased by Business Owners who will be using to carry for the purposes of conducting their business.
Maximum loan may be affected by Business Performance
Retail Business Owners May Occupy the Accomodation that is part of the building, often on upper floors
Mortgage Interest Payments are Tax Deductible Expenses for the Business
Includes Buildings such as Retail, Office Space, Warehouses
Stamp Duty Rates are different from commercial property when compared to residential
Commercial Mortgages Frequently Asked Questions
We have compiled a list of Common questions that we get asked which we hope will offer a useful insight into Commercial Mortgages.
1. Security
Buildings such as a shops, offices, warehouses and industrial units are typically used as the security for a commercial mortgage.
2. How Important is My Credit History When Applying for A Commercial Mortgage?
Whilst having a good credit history will help, some commercial lenders will offer mortgages to those that have experienced problems with obtaining credit in the past.
3. Who is the Borrower or Applicant on a Commercial Mortgage?
This can be an individual but also can be a business that uses the premises for trading. If the borrower is a business, the credit worthiness and financial conduct of the business will play a role in the approval of the mortgage.
4. Are the Deposit Requirements The Same As They Are for Residential Property Purchases?
Commercial lenders will typically lend up to 75% of the value of the property as long as the other lending criteria is met. Therefore, to purchase a commercial property you should have a deposit of 25% of the value of the property and for a remortgage 25% equity is likely to be required.
5. Is Remortgaging and Capital Raising still Applicable for Commercial Mortgages?
Yes, aside from trying to get a better interest rate on a Pound for Pound remortgage, Funds raised through a commercial remortgage can be used for several different purposes including acquiring additional property & redeveloping.
6. Am I Eligible for Tax Relief on Commercial Mortgage Interest Payments?
If the property is wholly commercial, then the commercial mortgage interest payments are tax deductible. It is also worth noting that the Stamp Duty payable on Commercial Properties is different to Residential.
