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Commercial mortgage loans are long-term loans used by businesses to purchase property or switch mortgages.

There are two basic reasons for needing a commercial mortgage property loan: to purchase premises for the business to operate in, or to buy property as an investment.

Business mortgages

Purchasing property for use by a business requires a business mortgage. This could be used to relocate a business, or for business expansion.

Commercial investment mortgages

Most commercial investment mortgages are for buy-to-let properties where income is expected from tenants paying rent and financial growth is likely from the increase in value of the property over time.

A popular form of buy-to-let investing is purchasing residential properties that provide rental accommodation for individuals, couples and families.

Many residential buy-to-let investors are part-time landlords with one or two properties that do not require full-time management.

Commercial property such as offices, industrial units and shops are popular buy-to-let investments. In major cities such as London and Manchester that have a high demand for offices, commercial investors can expect high yields on their investments.

There are also semi-commercial buy-to-let properties that mix residential and commercial use. These include shops with flats above them and pubs where the landlord lives on the premises.

Commercial mortgage loans can also be used to invest in land that does not have any buildings on it.

Mortgage switching and equity release

A commercial mortgage loan can be used to release equity in an existing building. This can be a building with or without an existing mortgage.

Switching mortgages is normally used to move over to a mortgage with a lower interest rate that reduces the monthly repayments.

Terms and condition

A commercial mortgage loan is a long-term loan that lasts 15 years or more. It is normally secured by the value of the building purchased. A deposit is required, which is usually between 25% to 40% depending on what type of purchase the loan is for. If a business has an existing building, then the equity from that can be used as additional security, and this could reduce the deposit.

The business applying for the commercial mortgage loan needs to be financially secure and profitable and will need to show the lender their audited accounts as evidence. The business should therefore have a good credit record.

How to find the best commercial mortgage deal

There are many commercial mortgage lenders and interest rates are relatively low, so there are certainly some good deals out there, but a business may find it confusing choosing between the many lenders and their varying deals. This is why it is best to use a mortgage broker. Ascot Mortgages are the experts, and we have access all of the best deals. We are dedicated to excellent customer service and can match the mortgage loan requirements of a business with the best deal.

Contact the friendly team at Ascot Mortgages today. We can find you a quote for a commercial mortgage loan in a matter of minutes.

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