What mortgage options are available for commercial properties? And how can you finance one? Here, we answer the top FAQs on commercial investment mortgages.
Is there such a thing as mortgages for businesses?
Yes! There are different types of commercial mortgages, and your circumstances and property investment plans will impact which is best for you.
An owner-occupier property investment is when you own the premises from which your business operates. Essentially, your business becomes the tenant within the building you own. How much you can borrow will be based on your trading business’ financial strength, with lenders typically offering up to 70-75% loan to value (LTV) mortgage products.
On the other hand, a commercial investment involves purchasing a commercial property where an unrelated party or business is already on a formal lease as the tenant.
Are business mortgages cheaper?
You will typically find that commercial mortgages are slightly more expensive than both buy to let and homebuyer mortgages. Furthermore, rates are often lower for banks’ favoured sectors, such as those in the ‘professional’ categories (i.e., doctor’s surgeries, dental surgeries, and solicitors’ offices). Commercial lenders usually charge higher rates for hospitality and leisure sector businesses.
However, all commercial loans are based on your individual circumstances, so our team of experts may be able to negotiate a better mortgage rate than you could access elsewhere.
Commercial mortgage rate pricing may also vary depending on whether you apply in your personal name or through an SPV or Trading Limited Company. Again, it’s best to chat through the different options with an MFB commercial broker.
How much of a deposit do you need for a commercial mortgage?
Lenders generally require a minimum deposit of 25%. However, some may offer mortgage products at higher LTV’s if additional security is available.
Is it hard to get a business mortgage?
Commercial mortgages are more complex than buy to let, but this doesn’t make them difficult to access. It’s worth noting, however, that commercial mortgage rates are subject to your unique circumstances, and many lenders won’t deal with borrowers directly, so working with an experienced broker is the best way to ensure you secure the right deal.
Can I buy a commercial property without a deposit?
As with buy to let, all lenders will want you to put down a deposit for your commercial property investment purchase. However, as mentioned above, we have seen 100% funding if suitable additional security is pledged. They will also want to see a certain level of experience, potentially within property investment and the sector relating to the business.
How do you get a mortgage for a business property?
The easiest way to get a mortgage for a business property is to work with a professional mortgage broker. Our team of experts will first look at your individual circumstances to help you assess the best type of mortgage for your property finance plans.
With plenty of years of experience within the commercial mortgage space, we’re best positioned to help find the right lender to accommodate your needs. Our established relationships within the industry mean we’ll quickly identify the right mortgage lender to take a view on your case, saving you time and money. As mentioned, commercial mortgage rates are subject to your unique circumstances, so our experienced team will be able to negotiate the right rate for you.
We don’t stop there. With a dedicated broker and client relationship manager assigned to your case, we’ll support you throughout the mortgage application process, from initial enquiry to completion.
What’s next?
To start exploring your mortgage rate options or to ask our experts a question, get in touch with our commercial mortgage team on 0345 345 6788 or submit an enquiry here.
