Expand Your Business with Mortgage Financing

Corporation Capital offers business mortgages with up to 75% loan-to-value for investment or buy-to-let properties, based on commercial lending criteria. Enjoy fixed interest rates and a 25-year term to secure property investments through your limited company. Explore your options today!

Investing in commercial properties can significantly boost your business and portfolio. To fund a commercial property purchase, you can choose between conventional business loans and alternative financing options. Understanding when to use each can help you balance growth and financial stability.

What Does Business Mortgage Financing Involve?

Business mortgage financing provides companies with loans to purchase, refinance, or renovate commercial properties, secured against the property itself. This type of financing helps businesses acquire capital for real estate investments, whether for operational needs or expansion.

With a business mortgage, you can purchase or refinance various property types, including:

Commercial Office Spaces or Buildings

Industrial Properties and Factories

Retail Properties and Storefronts

Short-Term vs Long-Term Rentals

etermining the Value of Your Commercial Property

Navigating Commercial Mortgage Options: What You Need to Know

Commercial mortgages typically come with either fixed or variable interest rates and have a set repayment schedule. In the UK, the standard repayment term is about 15 years, though some lenders may extend this up to 25 years.

Owner-occupier mortgages are perfect for businesses purchasing property for their own use. These loans often offer better terms, including lower interest rates and longer repayment periods. Businesses can typically secure financing for up to 75% of the property’s value when buying for internal operations.

Designed for businesses looking to rent out commercial or residential properties. These loans are often more complex, as they are based on the expected rental income the property will generate.

Also known as mixed-use mortgages, these finance properties with both commercial and residential components. An example is a building with a shop on the ground floor and apartments above. This allows businesses to finance properties with a combination of uses.

Business Mortgage: Benefits and Risks

Commercial mortgages come with various fees, such as application fees, appraisal fees, legal costs, and arrangement fees. These can vary depending on the lender and loan complexity. It’s crucial to review all charges to understand the full cost and ensure it aligns with your financial goals.

The benefits of a business mortgage include:

Business mortgages allow you to purchase property, helping you establish a real estate portfolio. Owning property can improve operational efficiency, provide cost savings, and offer growth opportunities. It strengthens your business’s foundation while delivering long-term financial benefits.

Commercial properties can be a solid investment, depending on factors like location and price. Rental income from the property can offset mortgage payments, reducing financial strain and creating steady cash flow for your business.

Interest paid on a commercial mortgage is deductible as a business expense, lowering taxable income and reducing tax liability.

Risks and Considerations

Fees such as arrangement and mortgage broker fees, as well as valuation fees, vary by lender. Properties worth £150,000 or more are subject to stamp duty land tax. Legal expenses, including insurance and site surveys, should also be accounted for.

Renovating or upgrading properties increases value and potential income, but it requires careful planning, budgeting, and adherence to local regulations.

Opting for a business mortgage with a shorter term can result in lower initial payments but may require frequent refinancing. This comes with risks, as refinancing might not always be available when needed.

Failure to meet mortgage payments can lead to legal action, including foreclosure. The lender may seize the property to recover the debt, impacting business operations and damaging your credit score. Some business mortgages require an initial deposit and may have limited flexibility for early repayments, affecting cash flow control.

Steps to Apply for a Business Mortgage and Explore Alternative Funding Solutions in the UK

Looking to purchase commercial property in the UK? Funding Options by Tide provides SMEs access to business mortgage brokers and alternative financing solutions. Connect with over 120 lenders, securing loans from £1,000 to £20M.

Start with Corporation Capital today.

Please be aware that the information provided is not financial advice. It is essential to seek independent financial guidance before making any decisions about your financial future. All loans and credit agreements carry inherent risks, such as the possibility of missed or late payments, which can adversely affect your business credit score and your ability to obtain future funding. Always carefully review the terms and conditions of any loan or credit agreement before moving forward. If you encounter difficulties with repayments, please reach out to us for assistance.

Funding Options, now part of Tide, assists UK businesses in accessing finance by collaborating with businesses and their trusted advisors. As a credit broker, Funding Options does not provide loans directly. All finance offers and quotes are subject to status and income, and applicants must be aged 18 or over. Terms and conditions apply. Guarantees and indemnities may be required. Funding Options may introduce applicants to a range of providers based on their circumstances and creditworthiness and will receive a commission or finder’s fee for successful finance introductions.

Fixed Rate vs. Variable Rate: Understanding the Differences

A fixed-rate loan offers stable, predictable payments, ideal for businesses seeking consistency. A variable-rate loan may start with lower rates but can increase over time, leading to higher payments. Choose based on your business’s financial needs and risk tolerance.

Stamp Duty: What You Need to Know

Stamp Duty is a tax on legal documents, mainly for property transactions. In the UK, it’s based on a percentage of the property price, with rates varying for residential and commercial properties. Understanding the applicable rates and exemptions is essential for budgeting your purchase.

Understanding Interest Rates

Interest rates are the cost of borrowing, expressed as a percentage of the loan amount. They vary based on factors like loan type, lender policies, and borrower creditworthiness. Fixed rates remain the same, while variable rates can fluctuate with market conditions. Understanding interest rates is key to comparing loans, as they impact the total borrowing cost and monthly repayments.

Additional Fees

In addition to the loan amount or service cost, there may be extra fees such as application, processing, early repayment charges, late payment penalties, and administrative costs. These fees can vary by lender and loan type, so it’s essential to review them to understand the total cost of borrowing or using a service.