Commercial Property Loans [Everything you need to know]

Are you looking to expand your business? Have you realised that the cost of renting has become too great? If so, you might find that a commercial mortgage can offer business finance options you weren't aware of.

00:00 Commercial Property Loans [Everything you need to know]
00:11 1. How Much Can I Borrow?
01:03 2. What Is A Commercial Property?
01:47 3. Do I Need To Show My Details?
02:54 4. What Is It That I Have To Give?
03:56 5. Why Is An Annual Review Compulsory?
04:53 6. Is There A Benefit To Stay With My Commercial Banker?

Here's everything you need to know:

- What is a commercial mortgage?
- The Long-Term Benefits of a Commercial Mortgage
- Applying For a Commercial Mortgage: What You Need To Know
- Commercial Mortgages For Start-Ups
- How Refinancing Works

What Is a Commercial Mortgage?
Commercial mortgages are for buying (or refinancing) any land or property for business purposes. Similar to a traditional, residential mortgage, money is borrowed and secured against a property.

The commercial mortgage market represents a smaller market share than residential mortgages - although their overall value is disproportionately high. Unlike a residential mortgage, a commercial mortgage extends finance in four distinct ways:

Buying business premises
Securing land development ventures
Developing an owner-occupied business
Adding to a buy-to-let portfolio
Commercial mortgages are structured to suit both the lender and the borrower. The lender needs to see security on their loan and the borrower wants to benefit through reduced repayments (compared to renting).

A commercial property mortgage is usually a long-term loan (often up to 25 years) that provides the cash to purchase a business premises. The mortgage lender will typically lend up to 70% of the property's value, leaving the business to pay its regular mortgage payments and utilising any working capital to fund the growth.

The Long-Term Benefits of a Commercial Mortgage
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A commercial mortgage can do a lot more than just house your business, they are increasingly viewed as a source of business funding.

Owning your own business premises means you reduce the risk of being exposed to increasing rental charges. Commercial mortgages can help future-proof your business by allowing it to access equity as the property price increases over time.

There are a number of benefits to choosing a commercial mortgage, many of which seek to offer future sources of funding and finance:

Release capital for investment or growth
Consolidate business debts
Buy new equipment
Expand trading
Cheaper than renting
Option for sub-letting or leasing parts of the property to create an ancillary income.

Business owners can use a commercial mortgage to purchase a business property either for their own business use, to rent out, for purchasing a company, or unlocking the equity within already owned buildings. It has become an increasingly flexible way of financing your property purchase - so long as you have tangible assets to secure against.

Applying For A Commercial Mortgage: What You Need To Know
There are a lot of lenders offering commercial mortgages. Choosing the right one for you is important.

Rates can vary, as can commercial speciality. Some lenders offer mortgages only when there is plenty of asset security available, while others prefer to lend to owner-businesses or will only fund land developments.

Any potential borrower is going to be subject to certain financial checks. These usually extend to:

Three years of accounts (or tax returns)
Current and projected performance figures
Bank statements
Details and profiles of all directors and partners of the business
Asset and liability statements.
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Mortgage term
The loan term can also vary dramatically - from 5 to 40 years. It’s a big financial commitment, so you need to understand what you want from your commercial mortgage and also what your mortgage lender wants from you.

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