A commercial mortgage is a loan granted to a company to purchase a commercial property.
Commercial mortgages differ in a number of ways from residential mortgages, including the following: for a commercial mortgage, the loan-to-value ratio may be lower, meaning less of the property’s total value is covered by the loan.
A commercial mortgage interest rate is greater than a housing mortgage interest rate.
Commercial mortgages are generally amortized for 20 years or more and paid back in periodic installments.
If you’re looking to grow your company, or if the price of renting company premises has become too high, you might consider investing in a property. Chances are, you’re going to look to explore the variety of commercial mortgage alternatives on offer as a prospective source of company finance and you’re going to rapidly find out there’s a lot to know about.
Broadly speaking, commercial mortgages can be used for three purposes:
Commercial mortgages for owner-occupiers are usually for two business situations: either a company wants to purchase the premises where it currently operates, or it wants to buy a new premises to move into.
Another common scenario for commercial mortgages is the purchase of residential property to be let out. This area is commonly used by professional landlords with a property portfolio, as well as buy-to-let limited companies set up for the same purpose.
Similar to the above, you can use commercial mortgages for commercial buy-to-lets as well. For example, you might want to purchase a warehouse via your company and let it out to another business. Although this type of mortgage is similar to residential buy-to-let, the lender will look at different factors because in general it’s more difficult to rent out commercial properties.
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