Commercial mortgages are for properties that you do not live in. Unlike residential mortgages, you cannot apply online. Commercial mortgages tend to be tailored to your individual needs rather than an off the shelf product. You cannot compare commercial mortgages online. You should use an independent advisor, who will find the best solution for your business or scenario. The process of acceptance for a commercial mortgage is not as cut and dry as a residential mortgage. There are many more factors to be taken into consideration.
When you compare commercial mortgages with your advisor, you will find that the lender that suits you best will be affected by not only your budget but also your business type, the premise type, the amount of equity or size of deposit. There are two types of commercial mortgage, the first being for those who want to buy premises to operate their own business from. This is an owner-occupier mortgage. The second type of commercial mortgage is an investment mortgage. You will buy the premise in order to rent it out to tenants.
Compare Commercial Mortgages : Length of Lending
Once again, the length of the mortgage will depend on various factors. In general, if you need to borrow money for less than 3 years, you should look for commercial finance as opposed to a commercial mortgage. Commercial mortgages can usually be arranged for up to 25 years, but once again, there are no solid rules.
Interest rates on commercial mortgages are generally higher than on residential mortgages. Fees are also generally higher, this being due to the fact that lending to a business is riskier than lending to an individual. The more deposit you have available, the lower the risk considered on your lending. It is possible to apply for a 100% LTV commercial mortgage, but the fees will be higher still. You will also need security for this type of lending, such as your own residential property.
Like with residential mortgages, you can choose from variable and fixed rate commercial mortgages for your business. Also, interest only mortgages are available, but in this case, you will need to be able to prove how you will clear the debt at the end of the interest only period.
Alternatives to Commercial Mortgages
Depending on the amount of funds you need to borrow, there are alternatives available to commercial mortgages. These include business loans that are a viable alternative if you only need to borrow a relatively small amount of cash. There are minimum amounts and lengths applied to commercial mortgage lending, meaning that business loans are sometimes a better option.
Comparing commercial mortgages is something you should do with your independent advisor. No matter what type of business you have, there are solutions available. From shops to restaurants and investment mortgages. Mortgage Style can help find you the most suited lending option for the type of scenario you are looking at.
Commercial mortgages normally require a larger deposit than residential mortgages, usually 25% plus, although there may be ways to fund this deposit elsewhere. You may even get the lender to take additional security if you have other property.
Tags: Compare Commercial Mortgages
Categorised in: Mortgage Advice
This post was written by Marcus Robinson