Commercial Mortgages Explained | Latest

Purchasing property is a large decision for any business. And you should seek
professional independent financial advice before going ahead with a commercial
mortgage.

A commercial mortgage can be taken out to buy, extend, improve or re-mortgage
business or buy-to-let premises.

Perhaps the biggest advantage of getting a commercial mortgage as opposed to
leasing your premises is that you are, to a large extent, fixing your overhead
cost. Of course there will be additional costs such as maintenance, and these
can be very high on commercial premises.

Another positive is asset appreciation, over the term of your loan it is likely
that the value of the building will increase.

Purchasing a building larger than you initially require is well worth considering,
you can sub-let any unused space until you require it. But be sure to obtain
permission from the mortgage lender before you do this. The biggest disadvantage
of purchasing your business premises has to be relocation; so getting more space
than your business should negate the need to re-locate.

Be prepared to stump up a quarter of the buildings value as a down payment,
while companies with a good credit history will probably only have to put down
5% upfront, as with any mortgage the lower the deposit, the higher the interest
rate.

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