Commercial mortgages are significantly different than residential; and there is a vast range of lenders operating in this niche of the market, from buy to lets between businesses, to investors with a portfolio of rental properties.
Revolution Brokers is a commercial mortgage expert, with a team of consultants on hand to provide independent advice about the best lending options available.
Give us a call with any questions on 0330 304 3040 or email the team at email@example.com.
What is a Buy to Let Mortgage for a Commercial Applicant?
A business buy to let mortgage is required for any investor purchasing a premise that they expect to rent to a business client.
This mortgage product is also called:
- Commercial investment mortgage
- Commercial landlord mortgage
- Business buy to let mortgage
- Commercial buy to let mortgage
How are Commercial Buy to Let Mortgages Different from Normal BTL Lending?
The critical difference is that an investment property is being mortgaged to rent out to business clients, as opposed to residents.
You can also find semi-commercial mortgages for properties with both a commercial and residential element - such as a shop with a residential flat above.
Are Commercial BTL Mortgages Available to Companies?
Indeed they are - businesses can apply for BTL mortgages to let out properties, although individual investors can also apply for business buy to let lending.
There are pros and cons to mortgaging a property through a company, so be sure to seek expert advice before committing to a trading structure.
Can I Mortgage a Commercial Premise on a BTL Mortgage?
Possibly, provided you meet the lending criteria. The type of mortgage on a commercial property differs from those available on residential rental homes.
Commercial investment mortgages are only for business rentals, and terms can fluctuate significantly between lenders given the scope and breadth of this sector of lending.
With multiple caps and variety around the terms, rates, and LTV caps on offer, it is essential to seek independent recommendations before applying for a commercial mortgage product.
How are BTL Mortgages and Commercial Mortgages Different?
Buy to let mortgages are a standard product where a landlord is buying a property to rent to residential tenants.
If the investment property is being let to a business, then you need a commercial mortgage instead.
Rates for commercial lending are usually higher than for residential, and the criteria will be a little different too.
How is Affordability Calculated on Commercial BTL Mortgages?
Affordability criteria do not work the same way as for residential buy to let mortgages.
Usually, you will find that the fees are higher, the interest rates more expensive, and the deposit requirements more significant. However, affordability will look at factors such as rental income, as well as how closely you meet their lending policies.
What Deposit is Required for a Commercial Buy to Let Mortgage?
The deposit required will depend on several factors:
- What sort of property you are investing in
- What business sector you expect to let it to
- How long the lease runs for, on leasehold properties
Residential mortgages can be offered up to 100% LTV (i.e. 100% of the value of the property), whereas commercial buy to let mortgages are usually capped, requiring a deposit of 25% and above.
Some specialist lenders in niche industries can accept lower deposits of 15%.
Alternatively, if you have a smaller deposit, but have another asset you can offer as security - such as another property or asset - you can negotiate a lower deposit value.
What Rates do Mortgage Lenders Charge on Commercial Property Investment Lending?
Generally, buy to let mortgages for commercial properties are mortgaged at higher rates than owner-occupied premises. Lenders offer both fixed and variable interest rates.
The rates charged will depend on the level of risk, assessed by looking at:
- The value of the property and size of the mortgage.
- What sector you wish to rent out to, and under what lease terms.
- Your personal credit score.
- Your trading history and experience.
How Can a Broker Help me Get the Best Commercial Mortgage Terms?
Expert commercial mortgage brokers deal with buy to let lending every day, and a whole-of-market broker such as the Revolution team has access to thousands of lenders, including deals that are not available on the open market.
It is always advisable to work with a broker to ensure you get the best mortgage rates and terms possible.
Can I Get a Commercial Buy to Let Mortgage with Bad Credit?
Lenders will assess the financial stability of your company, and yourself personally, to determine what sort of lending they can offer.
If you have a good credit score and clean credit file, you will have more lenders to apply to.
Is There an Age Limit on Commercial Buy to Let Mortgages?
It depends on the lender, but if you have a strong business plan and healthy finances, you can secure buy to let commercial lending at any age.
Most lenders will require applicants to be at least 18 years old.
What Other Criteria Impact my Business BTL Mortgage Application?
Lenders will need to know what the rental income will be, less the expected expenses to arrive at a projected profitability figure.
This is then 'stress tested' to ensure you would still be able to make the repayments, even if interest rates were to rise.
Mortgage providers will also consider:
- Your industry and business type.
- The building and whether it is a standard construction, or requires specialist lending.
- What the projected revenue is from the rental property.
- The security and deposit available.
- Your experience and trading history in the sector.
- How much the property is worth.
Can I Get a Mortgage for a Holiday Lease Investment?
You can - with guest houses and B&Bs being joined by Airbnb and other short-term rental businesses growing in popularity.
Holiday homes are different from normal buy to let since they will have a very short-term tenancy agreement based on a week or even a few days.
Lenders may find it harder to offer business mortgages for holiday lets. Still, it is essential to consult an experienced broker who can steer you towards the right commercial mortgage providers.
Are Commercial Mortgages Available for Multi-Occupancy Buildings?
Not really no - a house of multiple occupancy (HMO) isn't a commercial rental, but a residential investment that would need the appropriate type of BTL mortgage.
However, if you wanted to mortgage an investment property that was an HMO with a commercial proportion of the space, then you would likely need a semi-commercial buy to let mortgage.
Can I Use a Buy to Let Mortgage Calculator for Commercial Lending?
Online calculators are a useful tool to get a rough idea about how much you could borrow, or how much your monthly repayments would be.
However, remember that these are only ever indicative, and won't know your circumstances to give any indication about whether an application would be successful.
For an idea of rates payable and what sort of commercial lending you could achieve, contact the Revolution team on 0330 304 3040.
Professional Commercial BTL Mortgage Advice
For more assistance navigating the challenge of commercial buy to let mortgages, give the Revolution Brokers team a call on 0330 304 3040 or email us at firstname.lastname@example.org.
As an independent, whole-of-market broker, we can provide tailored guidance on buy to let lending across the commercial sectors.