Commercial Mortgages

A commercial mortgage can sometimes be a necessity when entering into a business, for example when buying a business that is tied to a property such as a hotel or public house. In such cases, unless you have the capital to cover the purchase cost, you will require a commercial mortgage to finance the buying of the business premises.

Owning the property that your business resides in can provide a far greater level of security compared to renting, for a start you will be assured the ability to stay in the premises and not have to worry whether the landlord is going to renew the lease. Secondly the business will have a large asset to fall back on if times are hard, the property could be liquidated and the proceeds used to help the business to get back on its feet.

Even if your business is not tied into a particular property, you may still find that a commercial mortgage is for you. Renting premises is fine for short to medium term, as it gives you flexibility and lower initial costs, however if you plan to stay in a premises long term you may find that buying could not only give you added security but also save your business money. When renting your are paying for the use of the property on a monthly, yearly or other such basis – at the end of the rental term you won’t have anything other than the time rented in return. A mortgage may require higher monthly payments, but at the end of the term your business will own the premises – something which could be a highly valuable asset.

Obtaining a commercial mortgage will be dependant on a number of factors that the lenders will take into account, the most significant will be the credit history and financial stability of the business in question, along with its financial projections for the future. Most lenders will also take into account the personal credit rating of the individual listed as the owner of the business, as this can indicate problems such as the running of previous businesses that were forced to cease trading and other such issues.

Commercial mortgages can be used for a number of applications, such as the purchase of new business premises, raising finance for extending current premises, residential and commercial investment as well as funding property development.

Provided that you and your business are judged to be credit worthy, organising a commercial mortgage should be relatively straightforward, but you should be aware that some lenders will place restrictions on the uses of properties funded through them, so make sure you are clear on the terms of the mortgage before you enter into it.

Check out our list of the best commercial mortgage providers.