Commercial Mortgages

There is very little difference between commercial and residential mortgages. In fact the only real difference is that the company will own the property and pay back the loan.

Unlike residential mortgages - commercial and semi commercial lending falls into a very strict lending criteria. Commercial lenders are not your normal high street building societies.

Most people will look to their high street bank for commercial mortgages. The high street banks often have very strict lending criteria and often turn down loans. What most people do not realise is that there are hundreds of commercial brokers and commercial lenders who understand business funding and have much more relaxed criteria.

The maximum amount that the lender will typically give is normally 85% of the purchase price. However 100% deals are available with extra security.

You can have the mortgage for any period between 1 to 30 years and the type of mortgage can be a repayment or interest only.

Like residential mortgages there are always special deals available and you can choose between a variable or fixed interest rates.

The process to obtain the loan is also very similar to residential mortgages. You will first receive a written decision in principle for the loan. This is a note from the lender detailing the rates he would be prepared to offer you based on the information he has received.

Assuming you are happy with the 'Decision in principle' offer you will be asked to complete a formal application. This requires a lot more detail information about the business and the property.

The property will need to be valued before the lender can make an official offer. Any issues from the valuation or application can affect the rates given of the 'Decision in Principle' form. In some cases the lender will decline the deal.

At this point your solicitor will handle the transaction and within a few weeks you will be the proud owner of a new business or premises.