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Commercial Buy-to-let Mortgage: what is it and how does it work?

Published on 31st July 2018 - Last update on 31st December 2018

Property is a highly sought-after commodity and the expense can make it very difficult for many UK residents to step onto the property ladder. Ultimately, the ever-growing demand for housing is fueling the buy-to-let market. As such, more and more entrepreneurs are now choosing to explore the advantages of becoming a landlord. Nevertheless, the challenge you still need to overcome is the cost. Fortunately, this is where applying for a Commercial Buy-to-let Mortgage can help. Buy-to-let Mortgages are secured, long-term solutions designed specifically for buy-to-let property. So if you’re looking to subsidise your income or improve the quality of your portfolio, here’s what you need to know about Commercial Buy-to-let Mortgages.

What is a Commercial Buy-To-Let Mortgage?

Commercial Buy-to-let Mortgages are designed specifically for property which is being, or going to be, rented out to tenants and can last up to 20 years. So, unlike other mortgage products, the terms and conditions for this type of funding don’t restrict renting out parts or all of the property concerned. This means you can begin generating a monthly income from housing tenants in the property concerned whilst repaying the agreement. However, it is also worth noting that Commercial BTL Mortgages:

  • Charge higher service fees and interest rates.
  • Require a larger amount of equity to be placed in the agreement. Subjection to negotiation, this can start at 25% of the property’s purchase price or market value.
  • Aren’t regulated by the Financial Conduct Authority (FCA).

Therefore, before placing an application, it’s vital that you fully understand how a Commercial Buy-to-let Mortgage works in order to make an informed decision for your business.

Looking to expand or improve the quality of your buy-to-let portfolio? Need help raising the necessary capital? Apply for a Commercial Buy-to-let Mortgage or learn more about how you could benefit.

What can a Commercial Buy-to-let Mortgage be used for?

What makes a Commercial Buy-to-let mortgage such an attractive product for many commercial landlords is that it can be used for a wide variety of purposes when it comes to property. As well as purchasing property with the intention of renting it out to tenants, this form of funding also allows you to release capital tied up within your portfolio. So if refinancing, this could be a useful way of supporting refurbishments, renovations or any other regeneration projects. Therefore, a Commercial Buy-to-let Mortgage is an invaluable tool for expanding and enhancing the living standards of your portfolio.

How are Commercial Buy-to-let Mortgages repaid?

Finally, when it comes to deciding how you’re going to repay a buy-to-let mortgage, you have two options available: Interest-Only or Repayment Mortgage. Whilst a Repayment Mortgage requires you to pay down both the Principle (money borrowed) and the interest on the agreement when making Fixed Monthly Repayments, Interest-Only agreements use a different method.

Most Commercial Buy-to-let Mortgages are established as interest-only agreements, meaning that you only pay down the interest at the end of each month. When the agreement matures, you then pay down the Principle in one single end payment. This, in turn, means that you make smaller monthly repayments, enabling you to save up the necessary capital to fully repay the agreement when the time comes.

Thinking about applying for a Commercial Buy-to-let Mortgage?

For many business owners, renting out buy-to-let property presents a great way of subsidising their income or supporting their pension. The challenge is that property in the UK is often very expensive and could easily drain savings if you were to try and fund it by yourself. Fortunately, there is another way to achieve your goal. Commercial Buy-to-let Mortgages are specialised lending products designed specifically to help support property acquisitions or release equity in property over a period of up to 20 years. All you need to do is source a cost-effective agreement from a lender you can trust.

At Rangewell, we’re an Access to Finance specialist who has mapped over 400 lenders to offer you an overview of more than 23,000 business finance products. Our services are free to use and we’ll also guide you through the application process. We’re with you every step of the way. So if you’re looking to invest in your buy-to-let portfolio, apply for a commercial buy-to-let mortgage today or find out more with Rangewell.


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David Harrison

David Harrison

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