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 properties.

A commercial mortgage works similarly to residential mortgages with the loan usually having a first charge against the asset.

Many of the UK banks have specialist divisions that deal with property purchases. 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. The terms and interest rate will depend on various points as follows:

  • The industry and market sector your business competes.
  • The length of time the company has been trading.
  • What is its trading profile (in terms of profits and growth)?
  • The risks associated with the mortgage loan itself.

For every type of bank investment, you'll need to provide an up to date business plan showing how the purchase of a new asset will affect the business performance. Your document also shows how you are going to repay the debt over the time of the loan. Find the latest current mortgage rates for your purchase at that lists the current deals available.

What are the uses for Commercial Mortgages?

As mentioned above, these types of loans usually cover the purchase of new or existing property. Unlike secured and unsecured loans, commercial finance can finance just about anything. Here are some examples:

  • Purchase a business to integrate into your existing operations.
  • For property improvement, if you're expanding or upgrading premises.
  • Raise working capital or purchase stock and materials.
  • For a business turnaround investment.
  • Finance the acquisition of a new building.

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.

Using a Broker

You don't need to directly approach your bank as many specialist money lenders operate in the commercial space. They deal with all types of industrial situations such as warehousing, retail, and factories together with the more traditional financing requirements.

Most offer competitive rates with standard and bespoke packages. They'll deal with individuals, limited companies, sole traders and partnerships. If you're an investor already you'll probably already have a team of experts, but others starting out may welcome their impartial advice.