Commercial Mortgages differ from residential mortgages in that there is no standard rate. The lender will set a rate based on an assesment of the business and its prospects for the future, and the type of property it is buying.
Large-scale funding for your businessSpeak to one of our experts020 4525 5312
invest in property
- Terms up to 20 years
- £50,000 – No Maximum
- Up to 80% Loan to Value available
- Rates from 2% over base rate
- Individual arrangements tailored to your circumstances
- Adverse Credit – no problem
- Repayments geared to your turnover
- Repayment and interest only available
Raise large scale funding
- Refinance existing property
- Use funds for any business purpose
- Purchase land, premises or investment property
- Commercial, Residential and Land
Thinking about buying a property or looking to refinance your existing property?
A commercial mortgage could be the solution for you
You can spread the repayments over up to 20 years
Table of Contents
Commercial Mortgages can be helpful to cover finance for areas in which a business loan can't. In addition, they can help provide large-scale finance to help grow and develop your business.
This type of finance is the obvious solution when you want to buy a property for your business or if you're looking to invest in a property.
In addition, a commercial mortgage could also provide a cost-effective way to raise funding for any other large-scale business cost
What is a commercial mortgage?
A commercial mortgage is a type of loan secured on property and works much like a residential mortgage, but there are a few differences you'll need to be aware of.
A commercial mortgage is ideal if you're looking to buy business premises or land for your business to operate from. It is also suitable if you're looking for a property to let out or develop as an investment. A loan of this type can provide the level of lending you need.
With a commercial loan, you can:
- Buy the premises for your business to operate from – allowing you to build up a valuable business asset and increasing your business security.
- Buy additional premises or land for expansion of your business.
- Buy business premises or land for further development (this could be a brand new-build, conversion or refurbishment of your current space).
- Buy a commercial or residential property to let out for profit.
- Raise cash with a mortgage on land or buildings you already own – and use it for any purpose.
When is a commercial mortgage used?
Generally speaking, business owners can use a commercial mortgage to purchase a property for their business to use, rent out, buy out another company, or unlock the equity within buildings they already own.
Types of commercial mortgages
Commercial mortgage loans can fall into two different categories:
This is a type of mortgage used to buy other property used for trading for your business.
Commercial investment mortgages
This is a type of loan you’ll need if you’re planning to let your space out.
Raise money for any business purpose
A Commercial Mortgage also lets you raise large-scale funding when you need it. First, you'll raise a new commercial mortgage on your existing property. Then you'll receive a cash lump sum to use as you wish, and you'll make monthly repayments until your mortgage term ends.
Suppose you already own premises, such as an office, factory or another commercial facility. In this case, you can use this to raise money, providing a cost-effective way to re-invest in your business. Then, with the money you've raised, you can buy another property, or use it to deal with a temporary cash-flow issue, if one happens to crop up.
How much can you borrow?
Because of the legal and administrative costs, it's uneconomic to borrow less than £50,000 with a commercial mortgage, and some lenders have a minimum of £75,000 or more, but there is no set upper limit.
Typical loan-to-value ratios for a new business with no trading history will be a maximum of 50% of the purchase price. However, owner-occupied businesses such as offices or shops can typically get a maximum loan-to-value of around 80%. Each lender will have its own repayment charge and repayment term, and may have different variable rates, so bear this in mind when looking at your loan term.
What will it cost?
Repayment options are similar to those for the residential market, but interest rates will be a little higher.
The lender will set the actual rate you pay on an individual basis. An established business with good prospects should be able to secure the most attractive rate.
Getting professional help with your application process, valuation fees, arrangement fee, and legal fees for your commercial mortgage can help you make substantial savings. Speak to Rangewell to see how we can help you source the best deal for your needs.
What are the requirements for a commercial loan?
Commercial lenders generally prefer their borrowers to have some commercial property investment experience as operating mixed-use or commercial properties require a greater level of understanding.
To increase your chances of being approved for business finance, you'll need the following:
- Have a deposit of around 20% - 30%
- Be a homeowner
- Have owned a few buy-to-let properties for a minimum of approximately 24 months
- Have savings in the bank
- Provide evidence of your income whether you receive a salary, are self-employed, or rent
If you don't hit all of the criteria above, don't worry! There are still options out there. Speak to Rangewell.
We work with some of the best commercial mortgage providers on the market, and we'll be able to source the right deal for your needs. Ask our brokers about variable interest rates today!
Alternatives to a business mortgage
Peer-to-peer (P2P) can match lenders to borrowers. However, the application process can be long and complicated, and an application alone may not be enough to attract investors.
Online lenders tend to make a decision faster. Some will even allow you to upload documents electronically without dealing with monotonous piles of paperwork. In addition, with some online lenders, the funds will hit your bank on the same day you apply.
Specialist lenders are more than likely to provide business loans to people who might not meet the criteria of mainstream lenders. For example, if you’re a start-up and have no business history, have an adverse credit record, or work in a sector requiring unique funding needs, it can be hard to source what you need from market lenders. In that case, a specialist lender might be able to provide a solution that works for you.
Why you need Rangewell to set up a commercial mortgage
Finding the most competitive mortgage deal across the entire market takes time and expertise.
At Rangewell, we have the expertise you need. We know the lenders who can offer the most competitive rates for all types of finance - including a commercial investment mortgage. We can work with you to ensure that a commercial mortgage really is the solution you need, and look at the alternatives.
Then we can help you refine your application and present it to the most appropriate lenders.
Commercial mortgages may be complicated to set up. We can help you through every step of the process. We might even be able to offer support if you're looking for a capital repayment holiday, too! Speak to a commercial mortgage broker today.
Call us to see what a Commercial Mortgage can do for you
When you are considering large-scale funding for commercial premises, it is essential to get expert support. Coming to Rangewell means getting an expert team working with you.
We can explain the details, help you find the most appropriate lender, and help you develop your application to secure the most competitive rate.
Whether you're a sole trader or a limited company, we'll have a solution to suit your needs. if you'd like more information. Please get in touch!
Last update: 13 March 2023
Frequently asked questions
Have a question?
A Commercial Mortgage works much like a homeowners mortgage. It is a large-scale loan secured on the property being financed, which will be repaid by monthly repayment over several years.
Commercial Mortgages can be arranged to run over a period of years that reflects the resources available for the business to commit to repayment. Terms of 10, 15 and 20 years are common, but it is possible to run for longer periods than that.
Yes, a Commercial Mortgage can be used to buy all types of commercial property, including residential property which will be used for investment - which will usually mean that it will be let out.
The most common deposit amount for a commercial mortgage is around 25% and 40%.
Most lenders offer occupier mortgages with a 70% - 80% loan to value ratio for commercial investment mortgages. It's rarely above 75% unless the borrow has additional security to put up.
Get in touch with our experts to find out about the wider costs and what legal charge is involved.
No, it’s not possible to use a business mortgage to purchase a property to live in. It would need to have at least some commercial floorspace for a commercial mortgage lender to offer you a loan of this kind. Get in touch to find out more about our commercial mortgage rates.
Download Rangewell’s free and detailed guide to Commercial Mortgages
How does a Commercial Mortgage work?
How can you use it to raise cash?
What are the costs?
What are the restrictions?
The downsides of Commercial Mortgages
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