Commercial Mortgages In The UK Finance Market

A commercial mortgage is very similar in principle to a residential mortage or remortgage. The money will be borrowed against the value of the business premises and will most likely be subject to interest over the term of the loan.

In fact, just as with a residential mortgage, the lender will retain an interest in the commercial property until such time as the capital plus interest accrued has been repaid in full. In the event of a default and where no suitable alternative to refinancing can be found, the lender can foreclose on the loan in order to liquidise the asset and realise the amount owed on the outstanding commercial mortgage.

Keeping The Costs Down

So, is there any good news with a commercial mortgage? The simple answer, we're happy to say, is "yes". With a commercial mortgage or remortgage, the interest that accrues is tax deductable and often, even the net proceeds of the loan are not considered by the Revenue to be taxable income. It is always a good idea however, to seek the advice of your accountant beforehand, to ensure that the planned usage of the finance is not for a qualifying business purpose. The world of commercial mortgages and business loans is definitely a specialist one and requires an expert's view before you jump in but a good accountant could help to save you a small fortune in the long run.

Here are some of the more common reasons for taking out a commercial mortgage:-

- Starting a new business

- Purchasing new commercial premises

- New plant or equipment

- Purchasing new vehicles, or even

- To provide much need working capital

If your planned purpose is anything other than to buy new property, the lender may well ask to refinance your existing commercial mortgage and provide the additional funds you require from the equity in your existing property. The alternative is to offer the finance against the difference between the value of the commercial premises and the outstanding commercial mortgage. The lender or broker will really come into their own here and hopefully provide you with a range of suitable choices that could really help.

Whatever your purpose, providing commercial finance is a specialist field, populated by a smaller number of lenders compared with residential mortgages. Their help however, can be invaluable for you to achieve your commercial objectives and get you to where you want to go. There's an old saying - "You need money to make money" and many would argue that in business, never a truer word was spoken and this is why borrowing money through a business loan or commercial mortgage is a sound way to achieve at least the first part of that equation. Always remember that it will most likely be the business itself that is used as collateral on the loan, so always read the small print and check your figures first.

It's pretty easy to enquire about a commercial mortgage these days. Find yourself an online broker and fill out the enquiry form provided. You'll probably find that you will have a decision in principle within a couple of hours although you will need to complete a written credit agreement. The lender may also require a valuation of the business so that they can accurately judge how much you could realistically borrow against it. The whole process may take a few weeks to complete but a commercial mortgage may just give you what you need to get your business to the next level of success.