Mortgages for businesses are also known as commercial mortgages. These are mortgages you can get if you need to borrow more than £25,000 which is where most business loans may be able to get you and be unsecured.
Mortgages for businesses are therefore secured on the property but this property cannot be your residential address.
Business mortgages usually have terms of between 3 to 25 years and will usually come with a loan to value of around 70 to 75%.
If the business mortgage is being taken out for an investment property then the amount you may be able to borrow with a business mortgage may be based on the rental income the property will be able to generate.
If you are buying a business with a business mortgage and this business includes stocks, goodwill etc then the mortgage lender will likely offer you an even smaller loan to value.
Bridging loans can help you complete the purchase of a property before you manage to sell your existing home.
Short-term loans can help you access funds without making any long-term commitments. This is often used for financial relief to cover working capital, cash flow, and a variety of expenses.
Personal loans can be used to borrow anywhere from say £1,000 to £25,000 – you do not have to be a homeowner to apply.
There are two main types of mortgages for businesses.
This is used for properties where you will be the main tenant and use the property as your main place of business.
This mortgage is used on properties which you intend to rent out to generate an income.
The interest charged on a business mortgage is usually a margin over the LIBOR rate.
So, for example, this could be 2% over LIBOR. This is similar to tracker rate mortgages where the rate follows the bank of England rate at a particular margin.
In some cases, you may be able to find fixed rate business mortgages but this will usually be for mortgage amounts less than £500,000.
The rates on business mortgages aren’t set from the offset but rather they are given based on the amount of risk the business mortgage lender feels they are taking by lending to you. If you fall beyond their lending criteria they
may simply refuse you a mortgage.
Business mortgages (commercial mortgages) will usually have better interest rates than a similar business loan as the mortgage is secured on a property.
Business mortgages (commercial mortgages) usually don’t have fixed rates and you will usually have to settle for a variable rate mortgage.
Business mortgages (commercial mortgages) usually charge a higher rate of interest than traditional residential mortgages.
Some business mortgage lenders may request personal guarantees from you if you have not been trading for so long and can’t show up to 3 years worth of accounts. They may still ask for personal guarantees on the business mortgage
if you have a low mortgage deposit.
You may be able to find a business mortgage with a higher loan to value than usual by using a business mortgage broker or commercial mortgage broker.
You may still be able to get a business mortgage if you have bad credit but you may have to put a bigger mortgage deposit down and pay a higher rate of interest
Business mortgages may required mortgage deposits of up to 30% and above.
Because business mortgages are secured on the property, if you default on the business mortgage your home will likely be repossessed
Business mortgages can have tax benefits as the interest you pay on the mortgage can be deducted from your taxes. You should seek independent tax advice on this.
Business mortgages (commercial mortgages) allow you to earn a rental income from the properties by using them as an investment.
If the property which you have secured a Business mortgage (commercial mortgages) on increases in value you may see the capital you invested in the business mortgage increase in value too.
When looking at mortgages for businesses you will usually need some key documents and getting this documents ready before you see a business mortgage broker or commercial mortgage broker may save you a lot of time in the business
Proof of identity and address for yourself and any other borrowers
Lease and/or tenancy agreements for the property
Bank statements usually covering the last 3 months for your business and yourself
Trading figures usually covering the last 3 years for the business
A business plan for financial projections – the business mortgage lender will use this to determine your mortgage affordability
Business mortgages (commercial mortgages) can be very complex sometimes and a specialist business mortgage broker or commercial mortgage broker may be able to assist you in getting your business mortgage (commercial mortgage).
When getting a business mortgage there may be some costs you will face. They include:
Yes limited companies can get mortgages but these are usually buy to let limited company mortgages or commercial mortgages.
Yes, you can get a mortgage for a business but this will depend mostly on your eligibility for a business mortgage.
The eligibility criteria for business mortgages
In order for you to qualify for a business mortgage (commercial mortgage), you’ll need to pass the lender’s eligibility checks which usually includes:
Yes, you can get a business loan or business mortgage to get a property.