Can You Get a Mortgage On a Commercial Property?

Are you looking to get a commercial mortgage? Find out in the following article what you need to be looking out for.

If you plan to expand a business or have found that leasing has become high, then getting a commercial mortgage could be the solution. Mortgages are commonly used for buying or refinancing a property for commercial use. Just like residential mortgages, money is borrowed and secured against the property. Commercial mortgages can also be used to secure a business. Read on and find out whether it is a good option for you

Commercial Mortgages

Business mortgages or commercial mortgages allow business owners to borrow the money needed to buy a property or land for their business. Similar to a residential mortgage, the amount is borrowed from the high street bank or professional lenders, and it is paid back in monthly installments along with interest.

It is mostly borrowed by business owners who want to own the premises where their business is based. Investors also get commercial mortgages who want to buy a property and lease it to another business. Residential property owners (Businesses) can also get commercial investment mortgages, and with that, they can buy properties to rent. These can also be packaged up as Commercial Buy to Let mortgages.

Can Anyone Get a Commercial Mortgage

Professional investors rely on commercial mortgages, but start-up owners often get confused about whether it will benefit them.

Getting a commercial mortgage can help you with financing your business. There can be high chances that your property value increases, and so does your equity. When equity rises, you can use it as an opportunity to expand through unlocking more cash flow. 

As a start-up owner, you would naturally have no trading or past experience or financial history. Therefore, you may find yourself with a lower LTV ratio. If this applies to your business, they will likely accept some form of personal guarantee. Most of the time, lenders accept such arrangements, and you would have a vast field to negotiate further when the equity level has been reached. 

Advantages of Getting a Commercial Mortgage

Commercial mortgages have increasingly become solid sources of business funding. Owning your property means you are in a more secure position. To future-proof your business, a commercial mortgage is one of the answers. As a developer or business owner, you can get a commercial mortgage to purchase a business property for a myriad of reasons; to add value to your asset, rent out, expand your business, and purchase a business. 

Here are the advantages of commercial mortgages:

  • You are free to merge business debts
  • You have more money to buy properties
  • You have a great opportunity to expand your business
  • You may also sublet out some part of your property to generate income.

If, for whatever reason, you think getting a commercial mortgage is not the best option for your project, there are other numbers of finance options available. You have to connect with a professional broker who can advise you on which option to choose.