Business Mortgage
Tailored success: Get your ideal business mortgage with expert, impartial advice from Simple Fast Mortgage
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Tailored to succeed: finding your ideal business mortgage
Where your business operates from is almost as important as what it sells.
Companies with their own business premises can be better positioned for growth. If you’ve found your dream location or have something in mind, you may need a business mortgage – also known as a commercial mortgage.
Just like with a residential property or people looking for a standard homebuyer’s mortgage, there are lots of different commercial mortgage products to choose from.
Factor in interest rate maths and additional legal and arrangement fees, and suddenly knowing which is the best commercial mortgage can be bewildering.
That’s where we come in.
At Simple Fast Mortgage, we are experts at scouring the whole of market to find our clients mortgage solutions tailored specifically to them.
We are proud to offer our services to commercial mortgage customers in Manchester and the surrounding areas, and provide credible advice on mortgages in London.
Whatever your needs, wherever you are, we can do the same for you.
What is a commercial mortgage?
A commercial mortgage is a loan that is secured against a property used for a business purpose – that could be anything from an office to an industrial or retail premises.
Unsecured business loans can provide up to £250,000 in funding, while commercial mortgages are aimed at firms looking to borrow £50,000 to £50 million.
Typically, they have terms of three to 25 years and require a 25% to 45% commercial mortgage deposit.
A commercial mortgage can be used in several ways, including:
- buying a commercial property
- releasing equity to invest in or expand your business
- refinancing to benefit from a lower interest rate or monthly repayments
- consolidating existing debts
Like a residential mortgage, a commercial mortgage is repaid in monthly instalments over the chosen term, alongside additional interest.
Unlike a residential mortgage, the value of the business property or land connected to the commercial mortgage is usually much greater.
Let us find commercial mortgage solutions tailored specifically your business.
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Different types of commercial mortgage
There are three forms of commercial mortgage:
Owner-occupied commercial mortgages (OPCO)
This form of commercial mortgage is loaned to companies which own the property they operate from and want to use as security.
Commercial investment property mortgages (PROPCO)
These commercial mortgages are for business owners who also have their own premises, receive rental income from a tenant or licensee and use this income to cover the repayments.
Property
portfolio
loans
Property professionals and investors can secure this form of business mortgage. Some or all of their commercial and/or residential property investments are taken as security by the lender, who issues one loan depending on the client’s total income from their assets.
Our expert team can help identify which form of commercial mortgage is right for you.
Which businesses can get a commercial mortgage?
Commercial mortgages are available to almost every form of business:
- sole traders
- partnerships (including larger ones)
- limited companies
- limited liability partnerships (LLPs)
- trusts
- self-invested personal pensions (SIPPs)
- small self-administered schemes (SSASs)
No matter how big or small your business, we can find commercial mortgage solutions tailored specifically for you.
Qualifying for a commercial property mortgage
The eligibility criteria of different commercial mortgage lenders can vary from company to company, and change over time.
Commercial mortgage lenders typically require applicants to complete an assets and liabilities form to determine their individual credit history and business circumstances.
These important personal and business details are the starting point for assessing your financial position.
Businesses applying for a commercial mortgage product must furnish bank statements for the last three months, accounting figures over the past two years, evidence of address including lease and/or tenancy agreements, and financial projections for the future.
A lender of commercial mortgages will look beyond your own credit history and how large a commercial mortgage deposit you can provide.
They will request information about the experience of senior members of your company, as well as the type of commercial premises or business entity you want to fund. The more stable your industry sector, the more you may be able to borrow.
The lender will then value the commercial property, depending on its condition and location. Known as a proposed loan-to-value, this will influence the business loan amount you can borrow, because commercial mortgages are traditionally based on a percentage of the value of the business premises.
Finally, the lender will assess whether the company can both afford and sustain the commercial mortgage repayments for the business property over the required mortgage term.
Our expert team can help ensure you meet any lender’s requirements.
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Commercial mortgages and bad credit
Even if you have a poor or bad credit rating, you can still make commercial mortgage enquiries.
It is worth knowing that you may be charged a higher rate or have a cap on the amount you can borrow to offset any perceived risk, but the final decision will depend on the lender.
Risk factors, interest rates and costs
Residential mortgages tend to be ‘off the shelf’, whereas most commercial mortgages are tailor made for each client looking to buy property, because the risk to the lender is often perceived to be higher.
For example, a mortgage lender’s interest rate is usually 3% to 5% above the Bank of England base rate. The greater the risk attached to the commercial mortgage for your business property, the more likely your repayments will be closer to the 5% rate.
Commercial mortgage lenders will also use information about the sustainability of your business income over the loan’s term (with longer commercial mortgages incurring more risk) as well as the property value to determine the business loan.
Like residential mortgages, a commercial mortgage product can have a variable interest rate or fixed interest rate, though each mortgage will vary between lenders.
Traditionally on a repayment mortgage, fixed or variable interest rates tend to be lower for firms planning to use an existing property as their own business premises.
Bigger, High Street banks may offer a 2% interest rate, while niche lenders could ask for up to 12% interest rate for high-risk commercial mortgage applications.
Finally, it’s important to be aware of any additional mortgage costs. They can include:
- arrangement fees
- valuation fees
- legal fees
- application fees
- exit costs
- broker fees
Whether you prefer a fixed interest rate or are happy to be among variable interest rate borrowers, our specialist broker team can help you understand the strict lending criteria, rate complexities and legal costs.
They will find commercial mortgage solutions tailored specifically for your business situation and will help achieve your growth goals.
What are the advantages of business mortgages?
There are lots of benefits from taking out a commercial investment mortgage.
They can be tax deductible
Business mortgage interest payments and associated expenses are often tax-deductible.
Steady
income stream
Quality tenants will provide a steady income that can cover the costs of any commercial mortgage debt secured
Expanded
investments
Business owners who remortgage an existing loan or take out a new commercial mortgage can afford to diversify their investment portfolios, minimising risk exposure.
How long does it take to get a commercial mortgage?
The length of time it takes to arrange a commercial mortgage depends largely on the business project behind it.
An existing customer seeking to release equity from their commercial properties may have to wait just a few weeks.
A more complex project, perhaps involving the purchase of new commercial premises, could take several months to arrange, because of necessary legal due diligence work.
Let us kick-start your business goals and find commercial mortgage solutions tailored specifically for you.
Why choose Simple Fast Mortgages?
There are many reasons to choose us.
We have access to a comprehensive range of commercial mortgage deals from a variety of lenders, including exclusive offers.
Our experienced, friendly team will call on all their resources to provide you with impartial, comprehensive advice.
We understand you lead busy lives, so we offer flexible appointments, including on evenings and at weekends.
We offer a free initial consultation to assess your needs and credit approval status, and you can make up your own mind about whether to use our broker services.
Our team will also stay in touch for the long term, ensuring you remain on the best deal possible.
Four simple steps to your commercial mortgage
2
We discuss your situation and the subject property to offer tailored advice about the possibilities and options available
3
We handle all the necessary paperwork and help manage your entire mortgage process, so you can get on with running (and growing) your business.
Contact us
If you have any questions about commercial mortgages that aren’t covered by our FAQs, or any of our other wide range of services, get in touch and we’d be delighted to help.
You can email us at: enquiries@simplefastmortgage.com, or fill in this contact form and we’ll get back to you straight away.