Whether you need a short term business loan or longer term finance to purchase a commercial property, The Mortgage Mum Specialist Finance can help you to find the best option to meet your needs, through our network of flexible lenders with individually negotiated terms.
What criteria do I need to meet for commercial finance?
Commercial borrowing is based on your business proposition. Important factors include the length of time you have been trading, your profit margins, your plans for the finance and potential for increased income. You need to have a strong business proposal explaining what you want to achieve.
If you’re looking for a commercial mortgage to buy premises for your business, a lender will look at the quality of your accounts and trading history to ensure your company will be able to afford the repayments.
Lenders also look for experience. If you’re going into commercial investment property, have you got experience of dealing with tenants, with rent arrears and maintenance?
What is a commercial mortgage and how do they work?
A commercial mortgage is a loan for buying commercial property. The property doesn’t have to be entirely commercial, but generally has some business element. Semi commercial mortgages are available for property with mixed use between residential and business and may be easier to obtain if you are a landlord venturing on from residential property.
You can purchase a commercial or semi-commercial property for investment purposes or to run your own business. Lenders will vary depending on how you intend to use the premises. If you already own the property, you can remortgage to release equity to buy additional property, refurbish or fund business activity.
Commercial mortgages are available through The Mortgage Mum Specialist Finance and we will be able to help you determine which type is needed.
Are commercial mortgage rates higher than residential?
Rates vary widely because these mortgages are more bespoke. Commercial borrowing is generally more expensive than residential. A commercial property is a riskier proposition to a lender than a residential property as there is less personal commitment involved, and often more money at stake. However, they are still a great way to raise the finance you need.
How much can I borrow and how much deposit do I need for a commercial mortgage?
Again, this will vary between lenders and in line with your business plans. If the bank can clearly see the value of your proposal and that it is comfortably affordable, they will lend to you. The amount will be calculated based on the details in your proposal.
Generally, you need a slightly higher deposit than you would in the residential mortgage world, of at least 25-30%.
Speak to an expert
We will work at times that suit you and your family, carrying out appointments via video call, telephone or email, giving you the benefit of first class service, around your own schedule, and in the comfort of your own home. So let us handle your mortgage today and find out how well we can look after you, The Mortgage Mum way!
What other fees/costs are involved?
Typical fees for a commercial mortgage are:
- Arrangement fee – paid to the mortgage lender, it can often be added to your loan. Typical costs are up to 2% of the loan amount.
- Valuation fee – the lender may send a surveyor to value the property. Costs vary depending on the property type and size.
- Legal fees – depend on the solicitor you choose. You’ll need to pay the lender’s legal fees as well as your conveyancing costs.
- Broker fees – payable on application. We will confirm the amount due before you make any decisions.
- Stamp duty – applies when you pay £150,000 or more for non-residential land or property. The government website has a helpful stamp duty calculator.
Is a commercial mortgage tax deductible?
This is a question for your accountant. Your accountant and your broker will work together with you on finding the right structure for your business borrowing.
What type of mortgage can I get?
Commercial mortgages can be repayment or interest only. Rates can be fixed or variable as per residential borrowing. It’s common to find ten year fixed rate deals in commercial borrowing, which is helpful for your long term budgeting and loan terms of up to 25 years.
How do I apply for a commercial mortgage?
This is where we come in. The commercial market is very different to the standard mortgage world and rates are tailored to the deal. We work with you on how to present your proposition to make sure you get the result you want.
Our relationships with lenders are also very important in finding you a good mortgage arrangement. It’s best to have a chat with us as soon as possible to explore all the options. (CLICK HERE)
How can The Mortgage Mum Specialist Finance help with a commercial mortgage?
Whilst this can be a complicated area we have a lot of experience in securing commercial mortgages, and will walk you through what’s required and when.
Because commercial mortgages can be more costly, it’s very important to get a clear understanding of the process and how much you will need to invest. Come and talk to us about your goals and we’ll get you a successful outcome (CLICK HERE)