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Are you ready to take your company to the next level? If you’re planning to move, expand or renovate your company property, a commercial mortgage is ideal to help you plan your development in an affordable way.
Our team at Pinnacle are completely dedicated to helping you make that purchase or secure the finance, where conventional finance may falter. We fully understand the importance of speed, and competitive options, which is why we combine the two, to offer you the best options available to you.
What are the features of a commercial mortgage?
The key features to a commercial mortgage as they differ from a regular mortgage:
- In most cases there are no fixed rates.
- You will pay a higher interest rate compared to a regular mortgage are there are higher risks to the lender.
- Generally, commercial mortgages offer much better interest rates than regular business loans as these do require property collateral.
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The benefits of a commercial mortgage
There are many reasons to consider taking out a commercial mortgage, here are a couple of reasons:
- Interest on your mortgage is tax deductible.
- You can rent the property out to generate more income for yourself.
- If the property increases in value, the capital may also increase.
What type of commercial mortgages are there?
There are two main types of mortgages to consider:
- Commercial investment mortgage, this is if you are planning on letting the property out.
- Owner occupied mortgages: This type of mortgage is used if the premises is going to be used for trading.
Rates charged on commercial mortgages aren’t determined from the offset. A lender will usually undertake a risk profile that they work to, if your loan falls outside their scope for risk it will be refused.
What fees are there?
Like all mortgages, there are fees involved that you need to be aware of:
- Arrangement fees: In most cases, the arrangement fee is added to the loan once it’s been approved but some lenders may request this earlier to cover their work.
- Valuation fees: For a valuer to come visit your property, these generally start at around £500 for a simple case.
- Legal fees: There are fees involved for both the lender and you which you’ll need to cover, and this starts from £500 each.
- Broker fees: A broker will provide you with advice tailored to your situation and present your case to lenders.
How do I know if I am eligible?
Once again, like all mortgages, you need to be able to pass a certain eligibility criterion in order to secure a commercial mortgage, a lender will perform the following checks:
- Projected income for the business in order to project if you will be able to afford the repayments.
- General income, assets and credit.
- Ability to pay an initial deposit which can range anywhere from 20% to 40% of the loan amount.
- General cash flow and if you posses any debts that can affect the financial health of the company.
If you want to see what options are available to you for a commercial mortgage, contact Pinnacle today and speak to one of our friendly mortgage brokers who are available 7 days a week and are with you from start to finish.