Commercial mortgage broker arranges finance for property investors and owner occupiers.

If you own the property already or wish to invest, there are two types of commercial property mortgage finance these are:

  1. Commercial Mortgage:
    These operate the same way as other mortgages do but they are designed specifically for businesses or owners of commercial properties. Lending criteria is usually around 70% to 75% of the value of the property but rates of 100% can be achieved with additional security. Commercial mortgages are a great way of raising funds to expand your business.
  2. Secured Loan:
    This is a long term loan similar to a mortgage but the security can be an item other than property. If you are seeking commercial mortgage or a secured loan we can help even if your bank has turned down your request.

You can borrow against many types of property but these are the most common; farms, public houses, restaurants, shops – with or without accommodations, hotels, guest houses, holiday lets, industrial units, factories, offices, warehouses and even boats. This list is not exhaustive so don’t worry if your type of property is not listed here, contact us for details. Both commercial mortgages and secured loans enjoy a number of benefits.

Here are five reasons why they could be right for your business.

  1. You retain ownership of the property, that means you keep all the profits rather than having to surrender some to an outside interest or an investor, however additional security or guarantees may be required. Bear in mind that to provide those you may incur legal fees.
  2. You can use the loan for any purpose, for example refinancing current debt, which will work in your favour if you are using it to preserve cash and working capital. However, if you are using it for this purpose make sure you know what constitutes a default and try to negotiate any potential default as early as possible.
  3. You can minimise drains on working capital by organising payments to fit in with projected expenditure, although you should check your lenders terms beforehand as some up-front fees may be payable for this type of arrangement.
  4. You can manage and simplify your cash flow by applying a preset loan schedule, if you know your monthly outgoings are going to vary – for example financing a building project – watch out for any early redemption penalties though.
  5. It is tax efficient – the interest payments are tax deductible.

There are some pitfalls to watch out for. You should always check the terms for late payment charges and make sure that lenders fees reimbursement, where there is a failure to repay the loan, covers reasonable costs only.

Mortgages for leasehold properties

If the property you have your eye on is leasehold, or if you are looking to raise funds against a leasehold property you occupy at the moment, there are finance options available although they are not as extensive as if you own or are buying it out right.

Types of finance on leasehold properties can be divided into two broad categories which are:-

  1. Short Term Leasehold – term of less than 55 years. We would recommend against securing monies on a leasehold property with a 55 year lease or less. The reason? It requires a specialist lender and is therefore very expensive. If you do opt for this kind of borrowing, expect to pay a one-off lease premium as well as a monthly rent. For more information on this kind of financing visit our Mortgages to Purchase a Short Leasehold Business page.
  2. Long Term Leasehold – Term over 55 years You can arrange a mortgage on a leasehold property so long as the lease term is over 55 years. However, the minimum unexpired lease outstanding at the completion of the mortgage term must be 40 years.

Bear in mind that with leasehold property maintenance, repairs and insurance are your responsibility, as tenant. That means if you are thinking of taking on a lease you should have a survey done to make sure there are no unexpected problems or bills!

Our Promise With Eland Business Services at your side you will benefit from our in-depth knowledge, years of experience and expertise. We know the pros and cons of the finance solutions available and we can help you find the one which will best serve the needs of your business environment.

Buying a Business that includes a Commercial Property

Prospective business purchasers can find that they do not have enough cash to complete a purchase when they discover their bank will only lend against the bricks and mortar value of that business. We may be able to fund a business purchase against reasonable operator value in some circumstances, allowing refinancing once a new owner trading history has been established.

Need a Commercial Mortgage?