Commercial mortgages – simplifying business premises purchases

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Commercial mortgages can be used to finance the purchase of business premises, and at Ascot Mortgages, we’re keen to help you find and apply for a suitable deal.

Many businesses rent their business premises, but there are several advantages to purchasing commercial property.

No rent review shocks

Most landlords periodically carry out a rent review. Often, there can be a shock when the rent rises steeply. Unless you know what the new rent is going to be well ahead of time, it is difficult to accurately include rent as part of a cash flow plan.

Interest on a variable commercial mortgages can go up and down, but increases will generally not be as steep as rent rises. It is possible to obtain a fixed-rate mortgage for the first few years of the commercial mortgage.

Properties are assets

A property that a business owns is an asset of the company and will add to the overall valuation of it. If the property increases in value, this will add to the wealth of the business.

Rent to generate income

If a business purchases property that is larger than it needs, then a section can be rented to a third party. This will generate an income that can go towards the mortgage repayments. A business will need legal advice to draw up a sound rental lease.

Put down a large deposit

Commercial mortgages are regarded by lenders as a greater risk than residential mortgages and as a result, a higher level of interest will be charged. If a business can put down a substantial deposit on the property, then repayments will be smaller and the loan could attract a lower interest rate,

Things to know before applying for a loan

Using commercial mortgages to purchase property can be a good business move, but there are several factors to consider before putting in an offer to purchase a commercial building.

Before buying commercial property, a business needs to make sure that there is planning permission for it to operate in the property. If there is no current planning permission for the building’s commercial use, then a business will need to apply to the authorities for permission.

The business should be aware of factors that could cause the application to fail. For example, if the property is near a residential area and large vehicles require regular access to the site, then permission could be refused.

There will be fees to budget for when applying for commercial mortgages. These include arrangement, valuation and legal fees.

Where to find the best commercial mortgages

There are numerous commercial mortgage lenders that offer loans for periods of from 3 to 25 years. Using a broker is the way to find the best deals.

Talk to a commercial mortgage expert at Ascot Mortgages who can find the best commercial mortgage deal to purchase your business premises. We can also help you will the application process, making sure that you present the correct documentation to support your loan application.

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