What Is a Commercial Mortgage?
A Commercial Mortgage is probably the best way to finance the purchase of buildings and land for business purposes; it provides the most flexible and affordable finance solution.
Commercial Mortgages are specialised due to the fact that the lender has a legal claim over the property until the loan has been repaid in full.
Loans of this type are tailor made for purchasing any commercial property used for business purposes including shops, factories, offices and warehouses. Commercial mortgages can also be used for taking over an existing business, purchasing a brand new building or even buying land.
A commercial mortgage provides your business with a major asset that is likely to increase in value and offers a wide range of additional benefits. These include:
- The opportunity to consolidate expensive short-term finance
- The ability to raise money for working capital or an injection of cash flow
- A reduction in the costs of an existing commercial mortgage
- An opportunity to increase your earning potential through refurbishing, improving or even expanding your business property
- Avoidance of exposure to just one lending source for both business banking and property investment
- Mortgage repayments may be similar to rental payments - therefore no need to budget for additional property expenditure or any increase in rent
- The interest on a commercial mortgage is tax-deductible
A commercial mortgage is a long-term commitment and, similar to a residential mortgage, will need to be paid off over a period of time which is called the term of the mortgage normally the length of the lease or similar to a residential mortgage term of say 25 years if freehold.
However, it is vital to ensure all repayments are made on time. Failure to so will accrue additional interest and, if you continue to default on payments, can lead to your property being repossessed and a poor credit status.