Commercial Property Mortgage

A commercial property mortgage is a loan secured against a building or land used for business purposes.

Unlike a standard residential mortgage, which is used to buy a home, a commercial mortgage can be used to finance:

• Offices
• Shops and retail units
• Warehouses
• Industrial units
• Factories and workshops
• Restaurants and cafés
• Pubs
• Hotels and guest houses
• Medical and dental practices
• Nurseries
• Care homes
• Storage facilities
• Farms and agricultural property
• Mixed-use buildings
• Other eligible business premises

Commercial mortgage terms depend on the property and the nature of the business or investment.

Applications are often manually underwritten and individually priced. This means the lender may want to understand the complete transaction rather than assess it using a standard automated process.

The lender provides a loan secured against the commercial property. A legal charge is registered against the building or land until the mortgage has been repaid.

You make monthly payments over an agreed term. Depending on the product, the mortgage could be arranged on a repayment or interest-only basis.

The lender will assess:

• The property’s value and condition
• Its current and proposed use
• The amount you want to borrow
• Your deposit or available equity
• Your business income
• Your trading history
• Existing financial commitments
• Your credit history
• The proposed mortgage term
• Your ability to make the payments

Where the property will be rented to another business, the lender will also assess the tenant, lease and rental income.

Commercial mortgage rates and fees may be determined by the lender after it has considered the individual application.

A commercial mortgage could potentially be used to:

• Buy premises for your business
• Purchase a commercial investment property
• Remortgage existing business premises
• Replace an expiring commercial mortgage
• Raise capital from a property
• Refinance short-term borrowing
• Purchase land
• Fund certain property improvements
• Restructure business borrowing
• Buy a mixed-use property
• Acquire premises as part of a business purchase
• Release funds for another business purpose

The lender will want to understand how the money will be used.

If you are raising funds from an existing commercial property, the purpose could affect the lender’s decision. Additional information may be required where the money will be used to purchase another business, repay creditors or support a business experiencing financial pressure.

Commercial mortgage applications require a detailed understanding of the property, business and proposed transaction.

MortgageKey can review:

• The property you want to buy or remortgage
• The purchase price or estimated value
• The proposed business use
• Your deposit and its source
• Business accounts and trading history
• Current management information
• Existing business borrowing
• Personal or company credit history
• Rental income where applicable
• The tenant and lease
• The amount and term required
• Your preferred repayment method

We can then search for lenders whose commercial property mortgage criteria may be appropriate and explain the potential rates, fees, deposit requirements and supporting information needed.

All commercial mortgages are subject to status, valuation, eligibility and the lender’s criteria.