Commercial Mortgage

“Commercial Mortgages”

Commercial mortgages are for real estate. Generally, this money is borrowed by a business or a company, unlike an individual seeking funds. The businesses need not to be individual, but can be in partnership. However, the interest rate of commercial mortgage loans is higher than the regular mortgage loans. For example: A loan for home.

Commercial mortgage loans are for three purposes:

Owner-occupied

For owner-occupiers, a commercial mortgage is for two business purposes. In the first situation, the owner might want to purchase the building where his company is currently residing in. In the second situation, the company might want to shift from the current building to a new premise.

Residential buy-to-let

A common scenario prevalent these days is the purchase of a residential property for commercial purposes. The property landlords create a portfolio of the property and allow the companies to set up their business.

Commercial buy-to-let

Commercial mortgages are somehow similar to residential mortgage. You might want to buy a huge warehouse via the company and rent it out some other business. In such cases, Commercial buy-to-let programs presents a great help. The lender will also have to make sure that everything goes well during the deal because commercial properties are hard to let out.

What are the eligibility criteria?

 A good trading history

The lenders consider your trading history when it comes to get a mortgage loan for business. They will check whether your business is efficient to repay the borrowed money. Being a limited company, you will need at least three years of registered accounts if you wish to fulfill the eligibility criteria for the large retail banks.

What will you with the property?

It is an important factor to recognize that the lender will give you funds after knowing the intention of buying that property. It puts a great effect on your rate of interest.

What are the advantages?

 Lower interest rates

Unlike regular mortgage, you can avail the opportunity to get your funds at a lower interest rate. You can have the liberty to decide your own amount for the monthly repayment. This will help you to manage other plans as well with accuracy.

Financial planning

Financial planning is a big factor to be considered if you are looking for a mortgage. Generally, these plans stretch till many years that allows you to work on other important issues as well which otherwise, gets arduous when stuck with financial burden.

Capital Gains

Buying your own property and your own space is of course a form of an investment as long as there are no discrepancies.  The prices of business properties can reach clouds after many years which will benefit you.

Ending a mortgage

Many times, you are indecisive about various things. You might feel like ending your business, moving to a larger premise or you are unable to repay your loan. You will still have many options left. This will only happen if you have applied for a commercial mortgage. Sometimes, getting yourself out of a long-term lease is hard. But you can still cover the loan if you decide to sell the property or rent it.

 

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