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Whether you’re creating a new business or simply extending your current one due to rapid growth, you will very likely require a commercial mortgage. Unfortunately, a commercial mortgage is not quite as simple as a home mortgage and can prove to be complex to even the most trained veterans.
A commercial mortgage loan is a type of loan which is secured by some type of commercial property, which can include but is not limited to office buildings, apartment complexes, warehouses and shopping centers. It is rare, but not unheard of, to have commercial mortgages take security over residential properties as well. The commercial mortgage that you took is specifically tailored to your needs and requirements, which are in turn generally derived from the industry sector in which your business operates. The mortgage is further dependent on the strength, performance, quality and future prospects of your business. Furthermore, it can also be dependent on the deposit you provide as commercial mortgages generally require quite a substantial deposit.
Generally, if you purchase a property of around 300,000 pounds, then there’s a great likelihood that you will be able to secure a mortgage loan of at least 75% of the price of the property. You may even be able to secure a mortgage loan greater than 75% of the price of the property if you come up with a proposition that the bank will be impressed with. Of course, the amount of the commercial mortgage loan will have to be either freehold or at least at reasonable lease terms in order for it to be viable for a mortgage loan. Furthermore, though it basically goes without saying, it is still pertinent to mention that you will definitely need to be able to prove that your business is capable of repaying the loan within the stipulated time. If there is even a slight doubt in this regard, your chances of securing a commercial mortgage loan will be greatly diminished if not completely extinguished.
Before you settle on a viable mortgage lender, you should carry out research to ensure they are the appropriate party to guide you. You should inquire about the fees that the potential lender will charge in respect of securing a loan for you as well as any extra expenses that they may charge you for. You should further discuss whether variable or fixed interest rates are more apt for your business and decide accordingly. Most importantly, you should always seek to make sure that your potential lender possesses the expertise that is a prerequisite while making such complex decisions.
While commercial mortgages may be a bit more complex than your average mortgage, they seem to be much harder than they actually are. However, with the wealth of experts available in this regard, you should face little problems. If you are able to negotiate through these tricky waters, then you will have little to worry about as you carry on your business.
Our FCA qualified advisors are here to help on 01872 250190