How to apply for a commercial mortgage

If you're plan to buy your business premises the likelihood is you'll need a commercial mortgage. They are quite different to a normal home mortgage and the process can be complex. This guide explains how commercial mortgages work.

• What is a commercial mortgage?
• Suitable property
• Commercial mortgage lenders

What is a commercial mortgage?

A commercial mortgage takes security over the business property and doesn't usually involve your own home. Your mortgage is individually -tailored to your business based on your industry sector, the strength and quality of your business, the quality of the property you buy, and the deposit you can provide.

• Tailored to your business
• Secured by the property

Suitable property

If you buy a property up to £250,000 you can usually borrow up to 75% of its value, and higher amounts may be available for quality propositions. The property needs to be freehold or have a reasonable lease term and must be in a viable location (eg not contaminated land). As with any loan, you need to prove that your business can repay the loan.

• Make sure the property is viable

Commercial mortgage lenders

There are many different things to consider when choosing a commercial mortgage lender. Ask about fees for valuations, security, solicitors and product fees, and how quickly they can get a decision for you. Talk about Fixed and Variable interest rate options to agree on what suits your business best, and how long you should take your loan over (longer term reduces repayments but increases the total amount you pay back). Make sure you are comfortable with the person you are dealing with and feel confident placing your business in their hands.

• Ask about fees, charges and interest rates
• Feel confident in your choice of lender

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