To purchase a commercial property businesses usually choose commercial property mortgages for funding. When buying industrial, office or retail space, these four buying purposes will determine the terms and rates of a commercial or business mortgage:
- your own business occupies the commercial property
- you purchase the property and a trading business onsite
- you want to invest in a commercial property long term via a Self Invested Pension Plan (SIPP)
- you want to re-mortgage an existing commercial property
Whether you purchase a freehold or long leasehold title, you will either qualify for an ‘owner occupier’ commercial mortgage, or for an investment mortgage. Please note that a minimum of 40 years needs to be remaining on a long leasehold to secure a mortgage.
Semi Commercial Property Mortgages
Buying a shop, pub, restaurant, café or office space with residential flats on top equally requires a commercial mortgage rather than a buy to let mortgage. Even if the residential space is higher in proportion than the commercial space you will require a (semi) commercial mortgage. To optimize the cost of mortgage funds, the value of the residential element should ideally be more than 50%.
Mortgage Criteria And Rates
To start with, we will need to understand more about your business in order to assess your best commercial mortgage option when buying a business property. For example, your business will need to demonstrate its ability to repay the mortgage from business profits or other sources of income. The amount of available deposit, your credit rating and trading history will equally form part of a mortgage application.
In general terms we can offer mortgages up to 75% of the freehold / long leasehold value of the property or business being purchased. If you are currently occupying a commercial property as a sitting tenant and running a profitable business then we can offer special rates and generally a higher loan to value.We can provide both capital and interest repayment schemes or ‘easy start’ interest only options.
Our panel of 50 major commercial mortgage lenders very active in the market who will look to provide a commercial mortgage at competitive rates for up to 30 years.