There are a number of reasons why you might be seeking a commercial mortgage loan.
The most usual reason is for purchasing commercial property for the use of a business. This may be either for a new business start-up, or for an existing business that has outgrown its current premises. If it is for a new business start-up, you may be looking for a pub, hotel or restaurant; a retail outlet or takeaway; or a manufacturing unit. Alternatively, if you already have a property, you may find that your existing premises are no longer big enough and you need a larger property. This kind of commercial mortgage loan is likely to be for about 15 years and will almost certainly be secured on the property itself.
An increasing number of people are deciding to purchase commercial property for investment purposes. This sometimes seems a more attractive investment than residential property, because of its higher yields and a more stable market. If you are looking to buy commercial premises for this purpose, you really need to seek a special commercial investment mortgage. The lender will need to give particular consideration to such factors as the length of the lease you are considering, the quality of the tenants and thee projected income.
You may wish to remortgage in order to take out additional money from the business. Of course this is something you need to consider very carefully. You need to use professional help to carry out careful projections of future income, to ensure you will be able to afford the increased payments.
Many expanding businesses find that they are exhausting their working capital with financing additional stock, work in progress and cash-flow problems caused by late-paying customers. The most efficient way to raise additional working capital is via a commercial mortgage loan – assuming you have the collateral. You may be able to secure one of these loans on your inventory or revenue, as an alternative to the building itself.
Whatever your reason for seeking a commercial mortgage loan, your best plan is to consult a commercial mortgage broker. There are an increasing number of lenders in the market and many of them specialise in specific business sectors. You need to find the lender who is most appropriate for your particular requirements.
Please note that the FSA do not regulate commercial loans or commercial mortgages