Commercial Mortgages are mortgage loans which are secured on commercial property such as business premises, warehouses, factories, workshops, garages, shops, hospitals and even schools.
Typical repayment periods on commercial mortgages extend from 10 years up to a maximum of 30 years, however, some lenders may offer commercial mortgages with very short repayment periods – as low as 2 years in some cases. Some lenders have provided the borrower with interest-only payments for the first 2 years whereas some have allowed the borrower to make deferrals on up to 2 payments per year.
As with all business loans and grants, much of what’s available is governed by what commercial mortgages (products) are available at any given time.
Whatever plan a business has, it’s fair to say that commercial mortgages do offer some important advantages over the rental of property or land. That said, it is important that before a business takes this big step in securing a commercial mortgage of any sort they should consider carefully the advantages and disadvantages of commercial mortgage loans.
Advantages of commercial mortgages
- you’d retain ownership of your business and your business premises. Whereas other investment options might involve giving up some of your business ownership
- you can make a substantial capital gain. This can be a great way of realising capital growth over a long period
- commercial mortgages are not subject to rental fluctuations of residential properties giving you a more stable business planning environment
- with typically lower interest rates than other unsecured loans/overdrafts, they offer lower monthly costs. Plus they can be fixed which can help you more accurately manage and forecast your finance
- tax deductible interest payments. Commercial mortgage interest payments are tax deductible. This can contribute to reducing your business’ annual tax overheads
- improved cash flow management. Commercial mortgage payment plans normally extend for a number of years letting a business focus on profit and loss and cash flow matters and
- providing the lender agrees, you can sub-let some of your business premises.
Disadvantages of commercial mortgages
- a decent sized deposit would be required. This represents money which could be used in other business operations
- it can be harder to move your business if you own the premises. With property rental, you can often negotiate ending your rent agreement or find another business to take up your tenancy
- if you have a variable rate mortgage, you can leave yourself vulnerable to interest rate increases
- you’re responsible for your property including maintenance, insurance and security
- if you lose value on the property, this will reduce your capital.
Now, whether you require a commercial mortgage to purchase business premises, or wish to buy a property for your existing business or perhaps would like to restructure your finances with a re-mortgage, we can help you access the finance you need by providing you with a quick and easy way to obtain the best commercial mortgage that’s right for you.
The good news for businesses looking to gain successful access to a commercial mortgage is that we can access up to 100% Loan to Value Commercial Mortgages PLUS we do all the hard work for you by finding the best deal for you.