Commercial Mortgages

Buying business premises is often a good investment – owning a property may provide stability and the property itself can become a valuable asset. To acquire offices, industrial units, retail space etc usually requires arranging a commercial mortgage that – just like a residential mortgage – is a loan secured against the property repayable over a defined period.

How it works

In recent years many specialist commercial lenders have entered the UK market, alongside established banks and building societies. Nearly all will require a business to have a positive credit rating and clear evidence that it is creditworthy. Most will similarly expect the business to invest a proportion of its own money in the purchase. The more the business is willing to invest, the greater the chance it will have of securing a loan for the balance.

Some lenders may impose restrictions on the uses of commercial premises, such as the ability to sublet to other businesses. It is also worth considering all the terms of any lending agreement, particularly as the loan period can be for up to 20 years.

The benefits

Investing in commercial property can often yield significant returns, mostly during periods of property market appreciation.

As with Asset Financing, the interest repayments on Commercial Mortgages are currently tax deductable in the UK, and a business can forecast its cashflow better as it is not susceptible to sudden, unexpected rent increases from opportunistic commercial landlords or agents.