Mortgages for Commercial Buildings

As with a residential mortgage, the commercial lender will hold the title deeds to the property as security. In the event of arrears the mortgage lender can repossess the commercial property.

A business owner who wants to fund his/her premises may use an ‘owner occupied’ Commercial Mortgage.

A Buy to Let commercial mortgage allows a landlord to purchase a commercial property solely for investment purposes and rely on the rental income to cover the mortgage and provide a profit.

Buying Commercial Premises – Advantages & Disadvantages

Buying commercial premises can be a good investment but before you commit, it is important to consider carefully the pros and cons. The acquisition of a property adds stability to your business and the property itself can become a significant asset,  the upsides and the downsides to buying are shown right:

ADVANTAGES:

  • A fixed rate mortgage means you will have predictable monthly repayments
  • The repayments are likely to be similar to a rental payment on the same property
  • You are protected from any sudden rent increases
  • Interest payments on the commercial mortgage are tax-deductible
  • Possibility to sub-let any free space, reducing your monthly repayments (lenders permission may be required)
  • Potential gain in value of the property

DISADVANTAGES:

  • Substantial deposit is required – would this money be better allocated to more important business purposes?
  • Selling business premises can be difficult. What if you want to re-locate?
  • If you have a variable rate mortgage, you are exposed to increases in interest rates.
  • Ownership means you’ll be responsible for ongoing costs such as security, maintenance repairs, fixtures & fittings and insurance.
  • Potential reduction in value of the property

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Contact Us