Commercial mortgages, sometimes referred to as business mortgages can be used to purchase a commercial property like shops, offices, apartment complex and warehouses. It’s almost anything that isn’t a private residential property and it’s mainly for business owners who are looking to acquire, refinance, or redevelop commercial property or land. It’s a familiar process for many businesses that have successfully grown and who are setting up a new work space or looking to expand beyond their existing business property. The property can be just a commercial or semi-commercial by including a residential element on its legal title such as a residential dwelling above or adjacent to the commercial dwelling. Similar to a residential mortgage, the money can be borrowed from a high street bank or specialist lender and is repaid in monthly instalments, along with the interest. It also lets you buy one or more properties either to use for your business or to rent out as an investment.

KEY POINTS:

• Similar to residential mortgages, it’s a type of secured loan where property is used as collateral by the lender against the loan, so if you default you are likely to lose ownership of your property.
• Lending criteria tends to be stricter with commercial mortgages and you’ll usually need a higher deposit of at least 20-25%. 
• It’s usually cheaper than renting.
• Typical commercial mortgage term can be anywhere between 3-25 years.
• There can be additional costs associated with a commercial mortgage such as valuation, arrangement and legal fees. 
• You may also have the option to sublet parts of your property to bring in an additional income.
• Typically, the interest rate will tend to be lower if you intend to use the property as your business premises rather than Let it out but lenders will also consider other factors such as, the loan size, loan to value, your credit history, your business financials and the level of risk.

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