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Choosing an optimal commercial mortgage isn't always straightforward. There are thousands of products on the market, and without like-for-like comparisons, how can you know:
Revolution Brokers have years of experience in brokering complex, non-standard and high-value commercial mortgages.
Here we'll explain some of the basics to help you understand the essential factors to choosing the right commercial mortgage. For tailored advice and bespoke application support, call us on 0330 304 3040 or email the team at info@revolutionbrokers.co.uk.
A commercial mortgage is pretty similar to your regular residential mortgage but only available to businesses.
Of course, that's a loose description, and you might be a corporation, limited company, partnership or sole trader - and that trading style may dictate the right lender to apply to!
Businesses might apply for commercial mortgages to:
Loans tend to go up to about £50,000, whereas a commercial mortgage is secured against a property, so there isn't any fixed maximum value you can borrow.
Commercial mortgages are long-term borrowing products, but we can negotiate terms from three years up to 25. You can usually borrow up to 75% as a top limit of the value of the property you're buying or using as security.
A business premises mortgage has some essential differences that set it apart from a regular mortgage:
You can take out a commercial mortgage brokers on any property purchase made through a business, whether that's as a rental investment or a premise you intend to trade from.
Any property you buy that isn't a residence and is intended for commercial use is eligible for a commercial mortgage - that could be an office, workshop, parcel of land, warehouse or combined trading premise.
Because business mortgages are inherently more expensive than a residential mortgage, a whole-of-market broker is essential.
Every business mortgage is bespoke and therefore involves a significant amount of negotiation, which the Revolution Brokers team can undertake on your behalf.
Rates, terms and arrangement fees are all arranged on a case-by-case basis, so we'd strongly recommend getting in touch if you're looking at applying for a business mortgage.
Because business mortgages are inherently more expensive than a residential mortgage, a whole-of-market broker is essential.
Every business mortgage is bespoke and therefore involves a significant amount of negotiation, which the Revolution Brokers team can undertake on your behalf.
Rates, terms and arrangement fees are all arranged on a case-by-case basis, so we'd strongly recommend getting in touch if you're looking at applying for a business mortgage.
Revolution works with many businesses, from first-time investors to large organisations looking to expand their property portfolios.
Our role is to work as an advocate for the business, ensuring that the commercial borrowing terms match your financial requirements and offer a safe, secure and competitive deal that will be more beneficial than anything on the open market.
Commercial mortgages for investment properties tend to max out at 65% of the value. In contrast, a commercial property mortgage for a trading premise can go around 10% higher, so the maximum you can borrow depends on the purpose of the loan.
You won't find published rates tables for commercial mortgages since every loan is assessed on a case-by-case basis.
Since commercial mortgages are unregulated, there isn't any standard basis against which a lender has to decide what to offer.
That means the application process is somewhat more involved, and the lender will need to see things like:
The good news is that Revolution Brokers manages these reports daily and are always on hand to help compile a robust application, with all the supporting evidence to ensure the lender is in an excellent position to offer approval.
When deciding whether to apply for a business mortgage, make sure you can afford the repayments both now and in the future.
Some of the points you may want to factor in include:
There are a few reasons a commercial mortgage offers advantages over other types of pending:
If you aren't sure whether to purchase a property as a private individual or buy through your business, it's vital to weigh up the pros and cons before making any long-term financial decisions.
You can also contact Revolution for independent commercial mortgage advice if you're torn between different borrowing options and need a comparable like-for-like comparison.
Generally, commercial property mortgages carry lower interest rates than any other type of loan. A fixed-rate means you'll have better cash flow management with a stable monthly repayment cost.
Commercial mortgages are also advantageous if you're looking to realise capital growth over a more extended period, rather than purchasing a property outright and being liable for considerable capital gains taxes.
Owning a business premise is also more beneficial than renting since it means you'll have a tangible fixed asset in your books, usually while paying the same cost per month as you would to rent.
Professional advice on a commercial mortgage is highly advisable.
There are many potential pitfalls to opting for a lender at random, and it's all but impossible to be confident you're minimising business expenses without an independent broker on your team.
You don't have to appoint a mortgage advisor, and there's no obligation to do so.
However, Revolution Brokers works with hundreds of businesses that save a considerable amount on their mortgage interest costs and enjoy bespoke repayment terms that align with their business plans.
As your commercial mortgage broker, we:
Commercial mortgages aren't FCA regulated, so it's even more crucial to work with a professional advisor than when taking out a residential mortgage.
Rates and arrangement fees are dramatically variable between lenders, so a commercial mortgage advisor will usually save you substantially more on your mortgage costs than you'll spend in charges.
There are a range of fees, which could apply to your mortgage. It's essential to understand the fee structure before going ahead with an application.
In some cases, charges make a commercial mortgage that otherwise seems competitive more expensive than an alternative product.
For example, a mortgage with a low interest rate but steep arrangement fees might be costlier than one with no arrangement fee and a slightly higher interest rate.
Some of the typical fees associated with UK commercial mortgage include:
It's always crucial to have a full breakdown of all charges involved with your mortgage.
Some costs are rolled up in the first mortgage payment, so they won't always be transparent, and you could think you're making initial repayments when in fact, you're only paying set up costs.
So, if you don't need to use an advisor and are reasonably happy to identify the top deals on the commercial mortgage market, why do you need advice?
Here are just a few of the compelling benefits of working with Revolution Brokers.
Remember that commercial mortgages are complex and can require extensive negotiating to pair up exit strategies and timelines, so we'd always recommend using a broker to ensure the process doesn't eat into your operating hours.
Every lender will have its own lending criteria that you’ll need to meet to be offered a commercial mortgage. The checks they carry out could include:
If a commercial mortgage isn't right for you, there are other options you can consider, such as:
Although business mortgages are hugely variable, most lenders will have several requirements and conditions of lending:
Revolution Brokers works with a broad range of clients, from care homes to restaurants, holiday let owners to hotels - we can provide more information about the applicable terms for your business mortgage on request.
There are two primary types of mortgage - an owner-occupier mortgage and a commercial investment mortgage.
Owner-occupier means you're buying a property through a secured loan to purchase somewhere to trade from. For example, that could be an office, warehouse, workshop or yard, for example.
Commercial investment mortgages are used to purchase sites to rent out to other business clients.
You must know what type of loan to apply for, as it's inevitable you will be turned down if you apply for an incorrect category of commercial mortgage.
Potentially. Fixed-rate commercial mortgages aren't a widely available product, and most will be based on a variable rate.
Usually, that's a fixed percentage above the base rate. Fixed-rate business loans can be arranged with the help of an independent broker, but they're generally only available on smaller mortgages of up to £500,000.
Undoubtedly, a broker negotiates directly with a broad network of lenders, selecting optimal products from across the whole of the UK commercial mortgage market.
Lenders don't work on published rates tables or standard terms in commercial lending.
Instead, they'll have a defined risk profile and automatically reject any applicant who falls outside it.
Therefore, having a broker to negotiate, advocate, and structure applications that navigate the risk criteria improves your chances of approval.
Commercial mortgages are secured against the property and one of the most significant investments your business might make - whether that's trading premises or buying an investment property to let out.
Either way, finding the right commercial mortgage for you is vital, and having an expert commercial mortgage broker by your side can save thousands of pounds over the lifetime of a mortgage.
A commercial mortgage broker is a secret weapon in navigating the vast number of mortgage products with ease - and comparing every deal like-for-like you're making sound business decisions.
Here are some of the key benefits to working with an independent commercial mortgage broker:
Revolution Brokers clients report tremendous savings, often through simply redirecting their application to a more flexible lender or working with us as their commercial mortgage broker to identify the most beneficial commercial mortgage products on the market.
If you're looking for a commercial mortgage broker, the first step will be to assess your circumstances and the critical priorities of your commercial mortgage application.
For example, that might be:
The key is to ensure your commercial mortgage broker is independent and whole-of-market.
Why? Because a broker who isn't independent is hugely limited in the products they can recommend - they can only sell mortgages from a restricted list of deals available.
Whole-of-market means that the Revolution commercial mortgage brokers team can scour the UK marketplace and recommend any deal, financial product, and lender that we feel will be to your advantage.
A commercial mortgage broker, or mortgage advisor, works on behalf of businesses to help them find the most affordable and competitive mortgage products.
Here at Revolution, we work with companies looking for mortgages for a wide range of reasons, such as:
UK commercial mortgages are unregulated, which means there are thousands of products offering a vast range of interest charges, arrangement fees and terms, so having a broker on your side is essential if you want to achieve the best rates going.
Our team assesses your requirements and then scours the market to compare the most appropriate mortgages from our UK-wide network of lenders.
As a whole-of-market broker, we provide access to every commercial mortgage out there, including broker-exclusive deals you won't find on the open market.
Familiarising yourself with the fee structure is beyond vital. Before you proceed with a commercial mortgage application, you need to know that you are comfortable with the costs, and the regular repayments or interest you'll be charged.
Mortgage broker fees for a commercial property loan are usually about 1%, although that depends on several factors:
For example, if you're looking to buy a commercial property at auction, we might recommend bridging finance to ensure you have the funds in place well before the 28-day payment deadline.
You'd then need a commercial mortgage as your exit strategy, and so facilitating a spliced mortgage product, and aligning the repayment of the original auction finance, would require more work than arranging a standalone commercial mortgage.
If you're interested in comparing commercial mortgage broker fees or seeing our indicative charges for your commercial property purchase, please give us a call at your convenience!
However, it's worth noting that with such a vast lending market, you'll almost always save thousands of pounds having a broker negotiate your rates for you, making the cost of hiring an experienced commercial mortgage broker far less than the savings on offer!
The exact payment process for arranging your commercial mortgage really depends on the type of lending you need and what products are best suited to your business.
Some lenders include brokerage fees within their product packages, in which case you might not incur any substantial costs to organise your borrowing account.
In other cases, we offer a fixed rate or a set percentage of the total value you need us to arrange for you, which we'll always disclose and agree on up-front before any work begins.
Average UK commissions for commercial mortgages range between one and six per cent of the loan value, again dependent on the size of the borrowing and the complexity of the application.
Deposit requirements vary between lenders, as do their interest rates and the terms on offer.
Mortgage lenders will look at several factors in deciding whether to accept your application. Having a larger deposit is advisable if there are any risk factors, such as a history of bad company credit.
Usually, you'll require at least a 20% deposit as an absolute minimum but will achieve better rates with 40% or above.
The lender won't typically have a fixed deposit requirement but might have a minimum threshold on commercial mortgages, generally around 30% on average.
They will also assess the Loan to Value, which evaluates how much you want to borrow against how much the property is worth.
For example, a commercial building worth £500,000 requiring a mortgage of £300,000 is an LTV of 60%, so a 40% deposit will mean you have negotiating power when it comes to rates.
Yes, you can! Every commercial mortgage lender will assess each application on a case-by-case basis.
The most common reason for mortgage rejection is that you've applied to a bank with criteria you don't meet or where they don't offer a commercial mortgage of the kind you're applying for.
For example, the lender might have a threshold deposit requirement or not sell commercial mortgages for the type of property you wish to buy.
There is no reason a great broker can't help you find a competitive commercial mortgage after refusal from another bank - one lender might be more than happy to approve an application that another hasn't accepted.
Your commercial mortgage rates won't necessarily increase after one rejection, either.
Working with Revolution is the best way to ensure your application is structured to mitigate any perceived risks and improve your chances of approval.
Commercial mortgages can be either repayment or interest-only. The format works just the same as for a residential mortgage:
However, fewer lenders offer commercial interest-only mortgages, and rates can be higher, so it's essential to work with a broker to identify those deals and get your application over the finish line.
Most interest-only commercial loans require a deposit of at least 25%. While your monthly payments will be lower, you will probably end up paying more interest overall across the lifetime of the mortgage.
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The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature. We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.
Revolution Brokers understands that mortgages can be complex and confusing!
Ask us any question you might have, and one of our skilled consultants will come back to you as quickly as possible.
