Commercial Mortgages

A commercial mortgage is a business financial product that allows you to get funding to secure commercial premises to expand your business.
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Aurora Capital

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What is a Commercial Mortgage?

A commercial mortgage is a business financial product that allows you to get funding to secure commercial premises to expand your business. Commercial mortgages come in different shapes and sizes. Choosing the right one for you will depend on your goals, as well as the type of property you’re looking to purchase.

How Long are the Terms on Commercial Mortgages?

Commercial mortgages are a longer-term finance product, meaning you’ll likely hold them for between 3-25 years. Like a residential mortgage, you’ll have monthly repayments to make. These can either be interest-only or full mortgage repayments.

How Much Deposit Do I Need for a Commercial Mortgage?

 In terms of a deposit, the standard amount you’ll need to put down will be from 20% to 40%. The exact percentage will depend on a range of factors which vary between lenders.

In terms of LTV (loan-to-value), this is usually 75%. However, you can get higher LTVs upwards of 80%, again, depending on the lender and your circumstances.

What are the Benefits of a Commercial Mortgage

Generally, renting isn’t a long-term game plan for many businesses. At some point, you’ll want a place your business can call home. Without the uncertainty of sudden rent increases, you’ll now have a steady monthly repayment plan that doesn’t change (depending on whether you fix interest rates). For some business owners, this is the preferred choice.

Additionally, as you have equity in the property, if it goes up in value, you can make a profit from the difference. Owning the premises also means you’re allowed to rent out sections, contributing towards your monthly repayments. This will depend on the terms of the mortgage, however.

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What are Typical Commercial Mortgage Rates

The rates of commercial mortgages vary and it’s difficult to give a general figure of what you can expect to pay. The number will be determined by the level of risk and what you can provide as evidence to the commercial mortgage lender.

The lender will consider credit, LTV, the loan size, and your business financials. As a side note, the rates will be better if you plan on using the commercial property as your business premise. If you decide to let it out to other businesses, the rates will be higher.

Generally, you can expect to pay anywhere from 2.25% to 18% interest on a commercial mortgage. However, a commercial mortgage broker can get you better deals from the best lenders.

What Types of Commercial Mortgage are Available?

There are lot of different types of commercial property mortgage available. However, the three below are the most common.

Residential B2L

A residential B2L is when you purchase a residential property with the goal of letting it out for rent. The individuals interested in financing these deals are usually professional landlords and have a property portfolio.

Commercial B2L

Commercial B2Ls are similar to residential in the sense you buy a property to rent out to another party. In this case, you purchase commercial property with the aim of renting it out to another business. An example of this could be when a business buys a set of offices and then rents it out to accountants, solicitors, etc.

Owner-Occupied

This involves the situations where a business buys a commercial property with the goal of setting up their operations there. This situation could arise when a business wants to own their own premise or they’re simply moving to another location.

How to Get a Commercial Mortgage

Getting a commercial mortgage can be both simple and complicated simultaneously. The number of loops you’ll have to jump through depends on a range of factors, which are sometimes set out by the lender.

When it comes to commercial property mortgages, it’s very important to see an experienced broker for advice. They can seek you the best rates with the most flexible lender. Aurora Capital is ready and waiting if you need advice with commercial loans and mortgages. Give us a call or fill in the form atop this page to learn more about us and our services.

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For more details on our services, applications or interest rates, please get in touch with our support team.

info@auroracapital.co.uk

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Office N, Dutch Barn. | Ford End, Chelmsford | Essex CM3 1LN

Registered in England: Trading under Timali Ltd.

Registered Company No: 08401705

Timali Ltd is authorised and regulated by the Financial Conduct Authority; 831395. Timali Ltd act as a commercial finance credit broker and not a lender

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