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The Best Way to Secure Finance for Commercial Mortgages

The Best Way to Secure Finance for Commercial Mortgages

What are the Best Way to Secure Finance for Commercial Mortgages? It is not always possible to finance all your commercial property needs on your own. While it is the best thing to do as you don’t owe anything to anyone, the next best thing to fulfil your commercial financing is a commercial mortgage. It is a commercial loan secured by a commercial property like a warehouse, office, shopping complex or commercial apartment. However, the mortgage rates of such loans are driven by the risk a lender undertakes, the market conditions, and the request for borrowing. This also means, that most commercial mortgages have floating rates, depending on the above-mentioned factors. This is why it is essential to secure it through a proper source like a bank, insurance company, etc.

Most businesses typically need a premise where they can establish their operations. This not only provides you with the ease to handle and execute your business but also gives you the freedom to do it your way. It also future-proofs your business as a leased or rented property will always have the risk of the owner wanting it back.

In this article, we will tell you everything about securing finance for commercial mortgages.

Ways To Secure Finance For Commercial Mortgage

Securing a commercial mortgage is not an easy task. This is simply because there is a lot of paperwork involved and every application goes through intense scrutiny. You can avail of a commercial mortgage via a bank, an insurance company or a professional commercial mortgage broker. However, it is important to understand your source before finalising it as there are a lot of factors that will work upon who you take the loan from.

Considering your source is also important because there is an additional amount of deposit of 20-40% you would need to provide in addition to the normal commercial mortgage rates and other fees. This is a lot higher than the residential mortgage deposit rate, which is usually around 5%.

These are long-term loans and their usual term is anywhere between 5 and 20 years. The amortisation period could sometimes be even longer than the loan’s original term. In these cases, the borrower pays monthly instalments in addition to the interest for the entire period of the loan term. This is then followed by the final payment of the loan’s amount, also known as the balloon payment.

Since the terms of a commercial mortgage are so intense and long-term, the lender would usually check the terms of affordability and credit score of the borrower. Most lenders also check the profitability of the business to get assured of the return.

The lenders also ask for 2-3 months of your bank statements, address and identity proof so that they have enough data to do a proper background check of your business. For better assurance to the lender, an organisation can also provide a long-term plan for the company and a plan of action for business growth and profitability.

Following are the steps that a borrower would go through in order to acquire a commercial mortgage:

  • Fill in an online mortgage form
  • Submitting relevant and important information about the business
  • Property valuation is done for the property that the borrower wishes to buy
  • Wait out the time taken by the lender to do the background check
  • Once all approvals are done, a formal mortgage offer is shared

Advantages of Commercial Mortgage

Getting a commercial mortgage has its own benefits. They include:

Low-Interest Rate

Commercial mortgages come at a lower rate of interest as compared to other unsecured borrowings. Additionally, knowing the exact amount you need to pay as a monthly instalment means you can plan your business expenditure and forecasting with certainty.

Business Financial Planning

Usually, the term of commercial mortgages is long. This allows businesses to concentrate on other important aspects of business like increasing sales, staff training and looking after overheads.

Long-Term Property Gain

Property prices can escalate quickly, making owning a commercial property a smart and beneficial investment.

Ending Mortgage

If you decide to move on in your business and get a bigger space or another business, you will still be left with plenty of options with a commercial mortgage, unlike other long-term leasing arrangements.

A commercial mortgage can have a long-term impact on your business. So, you must ensure that you get the one that suits your requirements the best and is for your financial benefit. To get the best deal, you must hire a commercial mortgage broker.

The knowledge, expertise and experience of a qualified broker in helping businesses acquire commercial mortgages quickly and easily can prove to be a boon for your business. Once the broker has a fair idea of your needs and prefrences, you can rest assured of finding a lender who is the best fit for you.

The extensive network of lenders that the mortgage brokers enjoy, will not only help you identify the right lender, but also ensure that your loan is processed seamlessly without any delays. The expertise of the broker would help you understand the terms and conditions of the mortgage and get the best out of it. There are plenty of aspects like mortgage terms, repayment, credit score and credit history, property usage, stamp duties, interest rates, refurbishing, renting, taxes, etc with the process of commercial mortgaging. Hencem having an expert broker by your side will always work in your favour.


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Representative APR Example

The rate you are offered will depend on your individual circumstances.

All loans are subject to status. The interest rate offered will vary depending on our assessment of your financial circumstances and your chosen loan amount.

Representative APR Example: On an assumed loan amount of £2,600.00 over 36 months. Rate of interest 41% per annum (fixed). Representative 49.7% APR. Total amount payable £4,557.89 of which £1,957.89 is interest. 35 monthly repayments of £126.61 and a final payment of £126.54


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