Owner occupier commercial mortgages are designed to help an owner of a business purchase the premises from which he operates; either freehold or long leasehold. It is estimated that over 40% of businesses that have been trading for over ten years, still do not own their own premises.
Obviously a business needs somewhere to operate from, and property is a factor of production.
There are many advantages to buying your own business premises, however the main ones are:
Security of Tenure
If you lease your premises, there can sometimes be few guarantees beyond the current arrangement. Under the Landlord and Tennant Act 1954, some tenants of commercial property have a statutory right to renew the lease at the end of the original term. This protection does not apply those who occupy a property under a licence agreement or a tenancy at will.
A tenant’s right to renew may, however, be defeated if the landlord can satisfy certain conditions. Moreover, some leases are contracted out of the Act completely.
To a property based business, where location is everything, having to move on can cause complete loss of intrinsic goodwill and spell financial disaster.
Potential Asset Growth
Commercial Property is considered to be a more stable asset than residential property and is less sensitive to interest rate changes. Over time the property in should grow in value, thus increasing the value of the business.
Potential to Sub Let
Your business might not need all the space that the building offers. In these cases, many businesses are subletting the space to other businesses, thus offsetting the running costs. There can also be a degree of symbiosis, such as an Estate Agency, subletting to a Mortgage Broker.
Feel its time to take control and buy; but how much can I borrow?
Up to 80% of purchase price, in some cases the lenders will work off the open market value, as opposed to the purchase price. If the purchase price is less than the open market value, this can mean very little money in. *
Up to 30 years term can be considered, where loan repayment is linked to a pension policy or ISA. *
Capital repayment holidays (interest only), of up to 3 years can be considered where the loan to value permits.
Interest can be rolled into the loan during year 1 with full servicing of capital and interest commencing at the start of year 2; on a case by case basis
Commercial “offset” facility available; make the best use of the company’s working capital.
To discuss your commercial loan requirement please call us on 0800 316 5756
* Subject to asset quality/useful commercial life.
Please note that the Financial Conduct Authority do not regulate commercial loans or commercial mortgages