Updated: Nov 22
Welcome to Approved Finance Group's Quick Guide to Commercial Mortgages. This comprehensive resource is designed to address important topics and provide answers to some of the most frequently asked questions we receive from our clients. Whether you're a seasoned investor or a business owner exploring new opportunities, our guide aims to demystify commercial mortgages and equip you with the knowledge you need to make informed decisions.
Table of Contents
WHAT IS A COMMERCIAL MORTGAGE?
Commercial Mortgages are financing options specifically designed for purchasing or refinancing commercial properties. They provide businesses with long-term loans secured against the property, enabling them to acquire or invest in commercial real estate. Commercial mortgages typically have lower interest rates and longer repayment terms compared to short-term financing options. They are ideal for businesses looking to establish a stable presence, expand operations, or generate rental income from commercial properties.
HOW MUCH DEPOSIT IS NEEDED FOR A COMMERCIAL MORTGAGE?
The deposit required for a commercial mortgage generally ranges from 20% to 40% of the property's purchase price. However, the specific amount can vary depending on factors such as the lender's requirements, the financial strength of the borrower, and the nature of the commercial property being financed
WHAT CAN A COMMERCIAL MORTGAGE BE USED FOR?
A commercial mortgage can be used to finance various business purposes, including purchasing commercial properties like offices, retail spaces, industrial units, and warehouses. It can also be utilised for property development, refinancing existing debt, funding business expansions, or acquiring income-generating investment properties in the commercial sector.
HOW LONG DOES IT TAKE TO GET A COMMERCIAL MORTGAGE?
The process of obtaining a commercial mortgage in the UK is typically efficient and streamlined, with lenders working diligently to provide timely approvals and funding. While the exact timeframe may vary depending on the specifics of the transaction, borrowers can generally expect a smooth and relatively swift process, ensuring quick access to the financing they need.
CAN YOU GET A COMMERCIAL MORTGAGE FOR A NEW BUSINESS?
Yes, it is possible to obtain a commercial mortgage for a new business. While it may be challenging, there are lenders who specifically cater to new businesses. Factors such as the business plan, personal credit history, and collateral will be taken into consideration during the approval process. Consulting with a finance broker can help navigate the options available.
WHAT ARE THE ADVANTAGES AND DISADVANTAGES OF USING A COMMERCIAL LOAN?
UK commercial mortgages offer long-term financing, lower interest rates compared to short-term loans, potential tax benefits, and the opportunity to acquire and invest in commercial properties. They provide stability, flexibility in repayment terms, and the ability to build equity over time. Commercial mortgages also allow businesses to secure funding for expansions, refinancing, and income-generating investments.
UK commercial mortgages typically require substantial down payments, involve complex underwriting processes, and may have prepayment penalties. Property value fluctuations can impact loan-to-value ratios, and defaulting on payments can lead to foreclosure. The application process can be time-consuming, and lenders may have stringent eligibility criteria. Additionally, commercial mortgages carry the risk of interest rate changes and economic fluctuations.
WHY USE APPROVED PROPERTY FINANCE?
Businesses should choose Commercial Mortgages by Approved Property Finance for their commercial property needs due to their reliable and expert service. With competitive interest rates, flexible terms, and a trusted reputation, Approved Property Finance offers businesses the opportunity to secure long-term financing for commercial properties with confidence and ease.
HOW DOES IT WORK?
We keep our business finance options transparent - no hidden fees or nasty surprises. This is business finance made easy. Our no-obligation application won't impact your credit score.