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Commercial Buy-to-Let Mortgage: What you need to know

Published on 25th August 2018 - Last update on 11th September 2018

Whether you’re an experienced commercial landlord or new to the property sector, owning property in the UK offers a wide range of benefits. However, purchasing property often requires a large capital outlay, placing an intimidating obstacle in your way. But if you lack the necessary capital or can’t afford to remove large amounts of cash from your savings, there is a more cost-effective solution available. Commercial Buy-to-Let Mortgages are secured, long-term agreements that are designed and offered specifically for purchasing and refinancing commercial property. So if you’re looking to purchase commercial property without destabilising your finances on account of the cost, here’s what you need to know about Commercial Buy-to-Mortgages before applying.

What can Commercial Buy-to-Let Mortgages be used for?

Commercial Buy-to-Let Mortgages are designed specifically for commercial property. But, as well as purchasing property, such agreements can also be used to release equity from your existing commercial property too, and for a variety of purposes including refurbishments, extensions and renovations. Therefore, applying for a Commercial Buy-to-Let Mortgage could be a great way of expanding and improving the quality of your commercial property portfolio.

Looking to purchase commercial property in the UK? Or do you wish to raise funds in order to support refurbishment and renovation projects for your portfolio? Apply for a Commercial Buy-to-Let Mortgage or learn more about how you could benefit.

How much capital can I borrow?

Another reason why Commercial Buy-to-Let Mortgages are so useful is that funding starts from £50,000 with no maximum credit limit. This is because the amount of capital that you can borrow depends on the concerned property’s asking price or current worth, depending on the purpose of the agreement. Plus, unlike Commercial Mortgages that take into account your current income, Commercial Buy-to-Let Mortgage providers, instead, consider the property’s earning potential (revenue).

That said, this also brings up another key difference between Commercial Mortgages and Commercial Buy-to-Let Mortgages - mortgage providers don’t impose any clauses that restrict your ability to rent part or all of the property in question. This means that can use your monthly rental revenue to gradually repay the agreement.

How much equity will I need to place into the agreement?

If you’re considering applying for a Commercial Buy-to-Let Mortgage, you’ll need to place a portion of your own capital into the agreement. With this type of mortgage the amount you need to set down starts from 25% of the property’s asking price or current worth. However, in order to improve your chances of being accepted and gaining a more favourable interest rate, you could offer a higher percentage, which will also be beneficial in that it will reduce the amount you need to borrow, saving you money in the long run.

How are Commercial Buy-to-Let Mortgages repaid?

Commercial Buy-to-Let Mortgages often use Interest-Only Repayments, which also tends to be the preferred method among experienced buy-to-let landlords. So for an agreed term (which can last up to 20 years), you’ll need to make repayments at the end of each month which will consist of just the interest. One benefit of this that the monthly repayments may be smaller than if you were using a Fixed Monthly Repayment scheme instead. However, at the end of the agreement, you then need to fully repay the Principal (money borrowed) in a single repayment.

Thinking about purchasing Commercial Property in the UK?

Property in the UK is often a highly-prized asset which can be difficult to acquire on account of the costs usually involved. However, whether you’re looking to start, expand or improve the quality of your property portfolio, there is one way in which you can overcome this barrier. Commercial Buy-to-Let Mortgages are an invaluable finance product for buy-to-let landlords, offering you the ability to rent out the concerned property, enabling to you generate an income. All you need to do source an appropriate agreement from a lender that you can trust.

At Rangewell, we’re an Access to Finance specialist who’s 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. So if you’re looking to purchase commercial property or improve the quality of your 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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