1. Purpose of a Commercial Mortgage
Business Premises: For purchasing or refinancing properties like offices or retail spaces for your business.
Industrial Estates: For buying or refinancing industrial properties such as warehouses or factories.
2. Getting a Mortgage for Business Premises
Prepare a Business Plan: Lenders want to know how the property will support your business.
Eligibility: Lenders assess your business’s financial health and may require a personal guarantee.
Financial Documents: Provide accounts, tax returns, and proof of income.
Choose the Right Lender: Compare rates and terms from commercial banks or specialist lenders.
3. Getting a Mortgage for Industrial Estates
Define Your Need: Whether for personal use or rental, industrial estates require specific documentation like valuations.
Higher Risk: These loans may require a larger deposit (up to 40%) and a solid business plan.
Property Assessment: Expect a professional valuation and potential additional checks on the property’s condition or zoning.
4. Loan Amount & LTV (Loan-to-Value)
LTV Ratio: Typically 60% to 75% of the property’s value, meaning a deposit of 25% to 40% is needed.
5. Interest Rates & Repayment Terms
Rates: Can be fixed or variable, typically higher than residential mortgages.
Repayment: Terms range from 5 to 25 years, with options for interest-only payments.
6. Eligibility Criteria
Lenders assess your business’s financial health and may require a personal guarantee.
You’ll need to provide business accounts, tax returns, and proof of income.
7. Fees & Costs
Arrangement Fees: Typically 1-2% of the loan amount.
Valuation Fees: Vary by property size and location.
Legal Fees: Paid by both borrower and lender.
8. Risks of a Commercial Mortgage
Repossession Risk: If repayments are missed, the lender can seize the property.
Market Risk: Declining property values can affect the loan’s terms and your financial stability.
9. Tax Implications
Interest Deductibility: Interest on commercial mortgages is usually tax-deductible.
Capital Gains Tax: Any profit from selling the property may be subject to CGT.
Seek Expert Guidance
Securing a commercial mortgage, whether for business premises or an industrial estate, can be a complex process. Seeking professional advice from a financial advisor or mortgage broker can help ensure you get the best deal and navigate the process smoothly.
Contact P10 Financial today for expert advice on securing a commercial mortgage for your business property or industrial estate.
