Commercial Mortgages

A commercial mortgage is different from a residential mortgage in that the property used as the security is a commercial premise. Such a mortgage could be suitable if you are wanting to invest in commercial property with a view to profit from the rental income or if you are a business that would like to purchase or raise funds against a commercial property that is used as your business premises.

COMMERCIAL MORTGGAE

The One That’s Right for You

Depending on Your Reasons For Purchasing A Commercial Property, One of the Following Will Be Right For You

Commercial Buy To Let

Typically purchased by investors who are expecting a return in the form of rental income/capital appreciation.

Maximum loan is based on achievable rental income

Some buildings have and accomodation element which can also be used to generate rental income

International buyers are also eligible for mortgages to enable them to make the purchase

Deposit required is usually around 75% of the property value

Includes Buildings such as Retail, Office Space, Warehouses

Stamp Duty Rates are different from commercial property when compared to residential

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Commercial For (Business) Owner Occupation

Purchased by Business Owners who will be using to carry for the purposes of conducting their business.

Maximum loan may be affected by Business Performance

Retail Business Owners May Occupy the Accomodation that is part of the building, often on upper floors

Mortgage Interest Payments are Tax Deductible Expenses for the Business

Includes Buildings such as Retail, Office Space, Warehouses

Stamp Duty Rates are different from commercial property when compared to residential

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Commercial Mortgages Frequently Asked Questions

We have compiled a list of Common questions that we get asked which we hope will offer a useful insight into Commercial Mortgages.

1. Security

Buildings such as a shops, offices, warehouses and industrial units are typically used as the security for a commercial mortgage.

2. How Important is My Credit History When Applying for A Commercial Mortgage?

Whilst having a good credit history will help, some commercial lenders will offer mortgages to those that have experienced problems with obtaining credit in the past.

3. Who is the Borrower or Applicant on a Commercial Mortgage?

This can be an individual but also can be a business that uses the premises for trading. If the borrower is a business, the credit worthiness and financial conduct of the business will play a role in the approval of the mortgage.

4. Are the Deposit Requirements The Same As They Are for Residential Property Purchases?

Commercial lenders will typically lend up to 75% of the value of the property as long as the other lending criteria is met. Therefore, to purchase a commercial property you should have a deposit of 25% of the value of the property and for a remortgage 25% equity is likely to be required.

5. Is Remortgaging and Capital Raising still Applicable for Commercial Mortgages?

Yes, aside from trying to get a better interest rate on a Pound for Pound remortgage, Funds raised through a commercial remortgage can be used for several different purposes including acquiring additional property & redeveloping.

6. Am I Eligible for Tax Relief on Commercial Mortgage Interest Payments?

If the property is wholly commercial, then the commercial mortgage interest payments are tax deductible. It is also worth noting that the Stamp Duty payable on Commercial Properties is different to Residential.

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