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Commercial Finance

What is a commercial mortgage?

A commercial mortgage is finance that allows you to secure a large loan on a business premise. Commercial finance mortgages allow companies to purchase property that be either used by the business themselves for their business operations or can be rented out to other businesses. These commercial properties could include retail units, office space and warehousing and more.

Differences between Commercial Mortgages and Corporate Loans

Corporate loans and corporate mortgages are both types of finance that is available to businesses in the UK. A commercial loan is available up to £25,000 and is not secured against any property. Corporate mortgages are a business loan over £25,001 which needs to be secured against a property because it is deemed a riskier investment due to its size, so the risk needs to be mitigated.

If you miss payments on a commercial mortgage, you risk losing your property. Therefore, it is vital that you assess your financial situation and your affordability for the monthly repayments, as well as the deposit.

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Differences between Commercial Mortgages and Regular Mortgages

Whilst there are many similarities between commercial and retail mortgages; you need to prove your affordability, prove your identity, and leave a deposit. However, there are important difference to note.

Typically, commercial mortgage lenders require a significantly higher deposit from their applicants with a lower loan-to-value (LTV) ratio – typically around 75%. This is when you will utilise the property yourself rather than rent it out to tenants. If you are letting the property, then the LTV will be lower – around 65%.

As corporate mortgages are considered higher risk, lenders will offer higher interest rates than on regular mortgages, usually only on a variable rate plan as well. If you have a bad credit history, this rate is likely to increase as well.

Finding the right Corporate Mortgage Deal

Whether it is your first or you tenth purchase of a commercial property, finding the right corporate mortgage is complicated and time consuming. An experienced and specialised mortgage adviser can help you find the right mortgage deal for you, finding the highest LTV possible with the best interest rate possible.

Commercial mortgages are adapted to each application and the mortgage lender will create a bespoke deal for each applicant. Active’s experienced advisers will help you with every step of the process and you can rely on them to be working with your best interests at heart.

The specialist team at Active is ready to make your commercial property dreams happen. Booking a consultation is easy…

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The 7 Commercial Mortgage Mistakes Guide

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