The term "commercial property finance" covers many different products and can have complex meanings. With several different options all under the same banner it can be difficult to choose the product that will best work for your business.
Via our sister company MyInfinity Finance, we will take the time to fully understand your individual needs to help guide you to the best commercial finance product. We can even help with finding a Solicitor who specialises in commercial property mortgages to ensure the entire process runs smoothly and efficiently.
To help you better understand what is on the market we have given a little information on the main products below.
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Types of Commercial Mortgages?
As the name suggests, this is a mortgage product for your commercial property. This works in the same way as your residential mortgage but has been specially designed for a commercial setting.
A commercial mortgage is available to a wide range of business types, from limited companies, LLPs and sole traders, with lenders typically funding up to 75% of the purchase with terms up to 30 years.
The lender will base their decision on the profitability of your business and ability to afford the monthly repayments. The security taken is typically a first charge.
What are the pros and cons?
There are many factors to consider when looking at your options but most businesses find a commercial mortgage protects them against any future rise in rent costs and allows them to expand their business by moving into larger/better premises.
However, if you are on a variable deal the cost of the mortgage could increase and may cost you more over a period of time.
Owning your own premises could give you the option to sublet part of it to another business to help meet your monthly repayments. If the property value increases your business capital will also benefit from the uplift. But, if you fail to keep up with the repayments on your mortgage you could face repossession.
When you might need commercial finance?
Generally speaking, you are likely to fall into one of three categories:
You wish to purchase a new commercial property to move your business into, or, you want to purchase the building you are in.
You want to purchase a commercial property such as a manufacturing unit, warehouse or office block to rent out to other businesses, but your own business won't be based there.
Like the above but instead of a commercial property you want to purchase a residential property to let to individuals.
If you would like further information on any of the above or you'd like to speak to a commercial finance expert, please contact us using the above form or request a call back.
Bridging finance is like a short-term business loan, though technically it isn't.
A bridging loan should "bridge" the need for funding to allow you time to repay the loan in full or source a more permanent financial solution.
As you'd expect given the specialist nature of the loan the interest rates are higher than a normal business loan.
The following are some typical questions asked about bridging loans:
Is it a business loan?
No, but the application process works much in the same way.
A bridging loan is always for a short-term purpose whilst you wait for your longer term option. A bridging loan can be paid down very quickly, normally within 48 hours from the initial application. This could mean you have the cash you need quickly to purchase a property or make essential upgrades whilst you wait for your long-term option to complete.
When might I need bridging finance?
The need is almost always commercial and is best suited to property development, that said they can also be used for residential properties. You may need to renovate a flat before you can sell it, or purchase a commercial property quickly.
The key to bridging finance is in the exit planning.
What is an exit?
The lender will need to see a clear route to recovering the loan and interest from you.
The lender could offer you a closed bridging loan, where the exit date is set, and you must repay the loan and interest in full as soon as this date is reached. They could also offer an open loan, which has no fixed exit date but a certain time frame in which to clear the finance.
If you would like further information on any of the above or you'd like to speak to a commercial finance expert, please contact us using the above form or request a callback.
Hello Mortgage Limited is registered in England and Wales. Registered Office: Suite 20, Cookson House, River Drive, South Shields, Tyne & Wear, NE33 1TL. Company Number: 10414170. DPA number ZA332902
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