Commercial Mortgage Loans

If you need a loan for a property asset then commercial mortgages can be used for loans against business premises, factories, shops, offices and other commercial property.

Like with personal mortgages a commercial mortgage will have a first charge over the asset that it is being used to loan against.

Many of the UK banks have specialist divisions that deal with property purchase and these departments specialise in every aspect of every industry including farms, schools, petrol stations and even residential property development and investment. All the major banks offer commercial mortgages including Barclays, Santander, HSBC and Lloyds TSB bank.

What is a Commercial Mortgage ?

It's the same type of loan as you would have if you are buying your own home although with business property purchases the risks associated with the purchase and the types of deals on offer are very different.

First off you can take a loan out with some lenders and brokers for up to 40 years which is unheard of for residential property. You will however probably need a deposit of around 25% as a minimum and the terms and interest rate will depend on the business you are in, how long it has been trading, what is its trading profile (in terms of profits and growth) and the risk associated with the mortgage loan itself.

For any type of bank investment you will need to provide an up to date business plan showing how the purchase of a new asset will affect the business performance and how you are going to repay the debt over the time period you want the loan for. More information on personal and business mortgages can be found at mortgagerates.org.uk who list all the latest current mortgage rates on their site and the latest deals available.

What can a commercial mortgage be used for ?

As mentioned above it's normally for buying new property but like business secured and unsecured loans commercial finance can be used for just about anything. It can be used to purchase an existing business to integrate into your existing operations, for property improvement if you are expanding or upgrading premises, to raise working capital or purchase stock and materials, for a business turnaround investment and of course to fund the purchase of new property and premises.

It's available for almost any type of business in all sectors including retail, manufacturing, leisure, farming and financial services. Speak to your bank in the first instance or check out some of the specialist commercial mortgage brokers and lenders to see what they can offer for your business development.