A commercial mortgage is for businesses that secure a loan on property which is not for residential purposes and covers a wide range of buildings such as office spaces, shops, retail units and factory spaces. If you are thinking about starting a business or expanding your operations in new locations, then a commercial mortgage should be something to consider if you don’t have the cash upfront to pay for such ventures.
Similar to business loans, you can take a mortgage on a property for a large amount up to around one million pounds, or a smaller mortgage of just tens of thousands – enough to cover the purchase of a commercial unit. Commercial mortgages usually are created on a scale of 3-25 years depending on a variety of factors.
If you are looking for an unsecured mortgage for business, then you may only be able to borrow around £25,000, as lenders have to protect themselves from any risk. If you already have an established business model, then a mortgage is much like an investment in your business, and the income you are already generating will largely decide how much initial loan you are entitled to, and how much you can reasonably afford to pay back.
A commercial mortgage differs from residential mortgages that you may be used to in a few different ways. It is rare to find fixed rates, they are usually high interest but lower than a normal business loan simply because property is being used as collateral. Did you know that interest on these types of mortgages can actually be deducted from your tax, and that if the value of the property you’ve purchased increases, the capital can also increase? What’s more, you’ll also be free to rent the location for an added income bonus.
Charles & Derby Estates are here to help guide you through the process of commercial mortgages, so give us a call today and find out how we can help you get started on your new business venture.