What is Involved in Getting a Commercial Property Mortgage?

There are many reasons you might want to look into commercial property mortgages. It might be for business purposes, or maybe an investment for your future. Perhaps you’re a seasoned property investor or you’re completely new to the game. Whatever your circumstances it’s always a good idea to seek professional advice.

Commercial property mortgages differ from your average mortgage in some ways, so we’re here to guide you through the process.

Common Questions When Applying For a Commercial Property Mortgage

So, What’s Different About Commercial Property Mortgages?

In short, it’s the options available, the application process and the way your mortgage is assessed. A commercial real estate mortgage application requires some additional information, compared to a regular mortgage.

What Sort of Commercial Property Can I Get a Mortgage on?

Some examples of buildings that would require a commercial real estate mortgage include:

Flats / buy to let property; offices; restaurants and hotels; garages; retail outlets; industrial buildings; land for commercial use.

The vast majority of commercial property mortgages fall into two categories. Some buyers choose to purchase a property using a commercial buy-to-let mortgage as opposed to a normal buy to let mortgage. The intention is to buy a house or flat which can be rented out to a third party. The rental income should be enough to cover the cost of the mortgage repayments.

The other popular option is for business owners to buy a building from which they intend to run their business. This way the monthly repayments should be covered by proceeds from the business.
For the lenders, it’s all about minimising risk. They will want to be sure that you can cover the monthly repayments before they agree to lend you the money. It’s up to you to demonstrate the ability to cover these costs.

What Information Do I Need to Provide?

Information required by the lender differs according to what type of property you wish to buy. 

For commercial buy to let mortgages you should gather together the following information, prior to starting the application process:

Tenants details and a copy of the lease agreement; 3-6 months personal & business bank statements; Income and outgoings; good credit history; application documents.

If you have other properties you will need to show details of monthly payments, property value, lease length and rental payments received.

If you want to secure an owner / occupier commercial mortgage you will likely need to demonstrate the following:

Two years trading accounts; Six months business bank statements; potential changes that could affect business turnover and profit; good projected income and cash flow; good credit history; debts.

Once you have determined which commercial property mortgage suits your requirements you will be able to agree with the lender the amount you can borrow. For commercial real estate mortgages the borrowing limit is usually 75% at most, sometimes lower. In many cases you will be expected to provide a deposit of up to 40% of the value of the property. The higher the deposit, the better the deal you should get. 

Repayment terms are agreed on a case by case basis, after thorough checks by the lender. They will vary depending on the type of property, location and value of the property. You can expect repayment terms to be anything from 3 to 25 years. As is the case with residential mortgages you will have the option to choose between a capital repayment and interest only mortgage.

It’s likely that you may still have questions about the application process. If that’s the case please feel free to contact an advisor at Stuart Brown Mortgage Services. They are there to answer your questions and give you honest, professional advice – 01525 877650.


email: advice@sbms-online.co.uk

Telephone 01525 877650 or 01442 252040.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up the repayments on your mortgage.

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