Compare commercial mortgages to secure funding against a business property with our finance division Think Business Loans.
A commercial mortgage is a long-term loan that’s secured against a non-residential property. In the UK, a business mortgage is usually available for up to 75% of a property’s value and is repaid over a period of between three and 25 years. A buy-to-let mortgage is a type of commercial mortgage, but others are available for different needs.
The amount you need to borrow can determine the type of loan you need to take out. If you’re borrowing up to £25,000, you might be eligible for an unsecured business loan. But if you’re looking to borrow more, your lender will want security. And that’s where a business mortgage comes in.
A commercial mortgage is often used in much the same way as a residential mortgage, but for business premises. For example, you might use a commercial mortgage to buy a property your business already occupies or is looking to move into.
Or you could use a commercial mortgage to pay for a property you want to buy as an investment, and any interest paid on a commercial mortgage is tax-deductible.
Commercial mortgage applications work in much the same way as residential mortgage applications, which means you’ll need to do complete and send an Asset and Liability form along with the commercial mortgage application form.
You’ll then need to supply the following information on your business:
To help the lender determine the affordability of the mortgage, you might also be asked to provide a business plan that includes financial projections.
The property will need to have been valued by an agent accredited by the Royal Institute of Chartered Surveyors (RICS), and all legal due diligence is carried out by the lender’s solicitors.
If everything gets approved, you’ll receive a mortgage offer from the lender.
A commercial mortgage is a big undertaking for any business, so you need to carefully consider the type of mortgage and lender to go with before you start the application process.
But there are loads of commercial mortgage lenders on the market, all offering different types of business mortgages that come with different interest rates and loan-to-value rates (also known as LTV rates, these basically determine how much of a deposit you’ll need to put down).
That’s why using a commercial mortgage broker is arguably the most straightforward way to compare commercial mortgage providers to find the product and lender that’s right for your business.
At Bionic, we work with Think Business Loans to compare the best commercial mortgage rates from our panel of lenders, which includes high street and challenger banks.
Our business finance division at Think Business Loans understands the calculations these lenders will use when assessing your application. This means we’re well placed to find the right lender for your business. Our iFunds technology searches for commercial mortgages from a panel of lenders to work out a solution that matches your needs.
Commercial mortgages are big deal for both the lender and the borrower, which means the lending criteria is usually robust. Although eligibility checks vary between lenders, you’ll most likely need to meet the following conditions:
It might also help your application if you’re a homeowner.
A commercial mortage is a very specalised product that’s generally available for larger amounts and can only be used for specific purposes. But there are alternatives available if you need to borrow lower amounts or need the money for reasons outside of property buying or development.
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To help you understand more about commercial mortgages, here are the answers to some of our most frequently asked questions.
There are two main types of commercial property mortgage to choose from:
You can take out a commercial mortgage loan on both an interest only and capital repayment basis.
Interest only commercial mortgages keep monthly payments low and can help from a cash flow position - but you’ll need to repay the full loan amount at the end of the mortgage term.
The amount you can borrow and the commercial property mortgage rates you’re offered will not only be affected by the current circumstances of your business, but also by the type of loan you apply for.
There are a number of fees that come with all commercial mortgages, but the amount you’re charged will depend upon the lender and the terms of your loan. Typical business mortgage fees and charges include:
A commercial mortgage application can take anything from a few weeks to a couple of months. The length of time your application takes will depend upon a range of things, including your current circumstances, the lender you choose, and the complexity of the loan.
Lenders will usually offer commercial loans for 70% to 75% of the amount you need to borrow (known as loan-to-value, or LTV for short). This means you’ll need a deposit of 25% to 30%.
Although fees vary from broker to broker, you can expect to be charged up to 1% of the value of the loan. As part of the service your broker should give you guidance based upon your specific circumstances and present your application to the lender to give you the best chance of success
A semi-commercial mortgage is a loan for a property that is used for both business and residential purposes, such as a flat with a shop above.
You can’t buy a residential property with a commercial mortgage. If you’re looking to buy a property to rent out to domestic tenants, you’ll need to apply for a buy-to-let mortgage. Similarly, if you want to buy a non-residential property to rent out businesses, you should look into a commercial buy-to-let mortgage.
Let the team at Think know how much you need to borrow and what you’ll use the finance for. They’ll use smart data to find out more about your business.
The team at Think will compare commercial mortgages from a panel of providers – including high street banks and alternative lenders - to find the right finance for your business.
You then choose the loan you want. Think’s tech-enabled team will answer any questions you have and help with the application to improve your chances of approval.
If you take out a loan, we'll be paid a commission by the lender that is included in the rates we quote.