What is a commercial mortgage?
They work like normal mortgages but let you buy one or more properties to:
- Use for your business
- Rent out as an investment
How do they work?
- Depending on your business, you could be offered quotes for interest only or repayment mortgages.
- The loan is secured against the property
- You can get a loan to value of up to 75%.
- This means you need a deposit or equity of at least 25%. Some let you use equity in another property you own instead of a deposit.
- You pay back monthly over a term of between a month and 30 years.
- Customarily you can borrow between £50,000 and £40 million.
How much do they cost?
Fees: Business mortgages come with many of the same fees as a domestic mortgage. Each lender has different charges, which can include valuation and arrangement fees. The amount could be a set fee like £995 or depend on how much you borrow.
Interest rate: The rates you’re offered depend on how much you borrow and your company’s finances.
Will you be accepted?
Each lender will evaluate an application based on:
- Your company’s income, assets and credit record
- Your personal finances
- If your profits are enough to meet monthly payments
If you plan to rent out the property, lenders may also look at the finances of your tenants. Our advisers can review your finances to evaluate the best lender and products for you.
Are commercial mortgages regulated?
Commercial mortgages are not regulated by the Financial Conduct Authority (FCA).
What properties could you buy?
You could get a commercial mortgage for:
- Commercial or residential buy to let investment properties
- Warehouses and factories
- Shops and retail premises
- Office buildings
- Pubs and hotels
- Farms and land
- Professional practices (e.g. solicitors’ offices)
What types of company can get a commercial mortgage?
You can get a commercial mortgage in your own name or held by a:
- Limited company
- Limited Liability Partnership (LLP)
- SPV (Special Purpose Vehicle)
- SIPP/SSAS
- Trust
- Offshore company
