Types of Mortgage to Buy Commercial Property
Businesses may need mortgage finance to purchase or invest in a property. They may also need to raise capital leveraged against the value of their property assets, or need another type of commercial property lending to assist with their cash flow requirements.
Revolution Brokers offer the full spectrum of commercial property mortgage loans, and each offer is tailored to your business and your requirements.
Options for a Commercial Property Mortgage Loan
- Bridging finance - short-term commercial property lending
- Commercial property mortgages and remortgages
- Limited company mortgages
- HMO finance lending
- Buy to let investment mortgages
- Commercial property lending for auction purchases
- Property development finance
- Borrowing for property investor projects
- VAT loans against property assets
Whether you are looking to buy a new property or refinance an existing property, there is a commercial property mortgage loan available to suit your requirements.
Factors in Finding the Right Commercial Property Mortgage
To secure the most attractive lending rates and terms, there are many factors to consider.
Revolution Brokers work closely with every client to understand what you need to raise financing for, how long the funds are required, and what type of commercial property lending will be best suited to your criteria.
Our professional advisors will look at different factors to offer independent advice about the best direction for you to move forward in. These can include:
- What the funding is required for.
- Whether your commercial property mortgage will be in your name or the name of a business.
- If the business is a limited company or another type of commercial entity.
- What sort of property you wish to secure your lending against.
- How much deposit you have available.
- Whether the property is VAT registered.
- How close you are to buying, and how fast you need your funds.
- Whether you have any adverse credit history to consider.
- What the price of the property is, and the anticipated rental revenue.
How Useful is a Commercial Property Mortgage Calculator?
Commercial property mortgage calculators are helpful to an extent.
They can show you an idea about what your monthly repayments might look like, how much you might be able to borrow, and how the costs will vary depending on the duration of the loan.
However, there are caveats, and a mortgage calculator is only ever an indication, not something you should use to make vital business borrowing decisions.
For example, a calculator can't take your circumstances into account.
Why is a Commercial Property Mortgage Calculator Only a Rough Indication?
As we've explored in the list above, a lender will consider multiple factors in deciding whether to approve your application.
A calculator can't build in these elements, so you might find that your offered mortgage rates are substantially different than expected.
While calculators can be a handy planning tool, we'd strongly suggest calling Revolution as an independent, accredited commercial mortgage advisor to ensure you're making the right judgment call for your business.
Can You Get a Mortgage on a Commercial Property For Development?
Mortgages for businesses are primarily used to:
- Buy a property to trade from.
- Invest in a commercial rental property.
- Release equity from a property you already own.
Businesses can finance developments through mortgages, but it's generally not the best option and much harder to qualify for.
Bridging finance or development finance is far better suited to a development.
For example, if you want to invest in a commercial property in a bad state of repair, you're unlikely to find a mortgage since the unit might be deemed unusable in its current condition or worth very little.
A bridging loan can provide short-term financing to cover most of the investment cost (with a deposit), and the cost of development works to bring it back into working order.
At that stage, you can refinance on a regular commercial mortgage, repaying the short-term loan.
If you're unsure what type of loan is best suited to your property purchase plans, do give us a ring at your convenience, and we'll be happy to contrast the options.
What Deposit Do I Need for a Mortgage to Buy Commercial Property?
Again, it's all down to the risk profile and how secure the lender feels your application is.
Generally, you’re looking at a maximum Loan to Value ratio of around 75%, so you will need a deposit of at least 25% to take out a business loan.
There are other options, and a specialist broker such as Revolution may be able to negotiate on your behalf if you have a robust application but a lower available deposit.
For example, a lender might consider a higher LTV if they have personal guarantees from the company directors to mitigate the increased risk.
How Long Does it Take to Get a Commercial Property Mortgage Loan?
Processing time for new commercial mortgages varies considerably between applicants, given the unique nature of each business.
Most commercial loans take around 8-10 weeks, although that's a rough average.
What Are the Fees Associated With Commercial Property Finance?
As well as interest charges, there are few other costs to factor into your commercial finance application, whether that's a bridging loan, development finance facility or commercial mortgage.
- Some lenders charge arrangement fees to set up your account.
- Exit fees are a pitfall to watch out for and can be high costs to leave a deal before the end of an initial or fixed term.
- Application fees aren't charged across the board, but some lenders charge a fee before they'll consider an initial application.
If you're unsure about the fees charged or want to make sure you aren't paying over the odds, give us a call, and we'll recommend the right lenders with the most competitive fee structures.
Average Interest Rates on Commercial Property Finance
Different mortgage brokers will all have criteria and types of projects and properties they will and will not lend against.
There isn't any average rate since every application is assessed on its merit. The lender will use the information provided to arrive at a proposal if they're in a position to accept your application
Using an independent broker means that you have access to the entirety of the commercial property lending market and that we assess on your behalf which products are most competitive, and align with your financing needs.
Revolution Brokers act as an advocate on behalf of every client, and not only source the most competitive deals for your needs, but negotiate with commercial property lending providers on your behalf.
Every commercial project is different, and so should your mortgage be. Use Revolution Brokers for a genuinely independent and bespoke lending solution.
Give us a call on 0330 304 3040, or drop us an email at [email protected] and we will get the ball rolling on securing your ideal commercial property mortgage!
2023-05-09 
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