28 Oct, 2021 08:16 AM
Admin Category: Business Advice,

Commercial Mortgage Loans

Commercial mortgages are loans that are made to your company rather than to you individually.

Any loan secured on property that is not your primary residence is referred to as a commercial mortgage. Buy-to-let mortgages are a sort of high-volume commercial mortgage market for a mass market.

If you want to expand your firm or make better use of your income, there's probably a commercial finance package that can help.

When are commercial mortgages used?

In most cases, commercial mortgages take on where business loans leave off. Up to £25,000 in business loans are unsecured, but bigger sums require security to decrease the risk to the lender.

A business mortgage normally lasts three to twenty-five years, and a 70-75 percent loan is common. This is a loan-to-value ratio calculation that shows how much you're borrowing in comparison to the property's value. If you're borrowing money to buy an investment, the amount you can borrow will be determined by the rental income provided by the investment, but it won't be more than 65 percent of the purchase price. The amount available will be further lowered if you are purchasing a business that includes goodwill, stock, and other assets.

Why should you use commercial mortgages loans?

A commercial mortgage can assist a business in a variety of ways, including purchasing your own premises and business equipment (such as machinery and vehicles), replacing a traditional bank loan and overdraft, and even assisting you in managing your cash flow by allowing you to receive your income before your clients pay you (known as factoring).

Who can get a commercial mortgage?

You can qualify for a variety of commercial loans whether you're a Trading Business, a Limited Company, or a PLC.

In actuality, the UK has over 100 specialty commercial lenders, each with its own set of criteria, rates, credit appetite, and geographic concentration. Positively, this implies that whatever your company's requirements are, there's likely to be a lender willing to help.

Key features of taking out a commercial mortgage

In the following aspects, a business mortgage differs from a standard mortgage:

- For commercial mortgages, there are normally no set rates.

- Commercial mortgages normally have a higher interest rate than regular residential mortgages because lenders perceive them to be riskier.

- Because commercial mortgages need property as collateral, they typically have lower interest rates than conventional company loans.

How difficult is it to get a commercial loan?

Because of the large number and variety of lenders, finding the best one could take a long time. That is, however, where we come in.

SEICO has built long-term partnerships with lenders spanning a wide range of business kinds and loan needs over the course of over 30 years as independent brokers. We can work with the finest lender for your needs, ensuring that you pay the necessary fees, get the greatest rate, and choose the best loan type for your company.

Why would it benefit my company?

Here are some reasons why you should consider obtaining a commercial mortgage:

- Your commercial mortgage interest is tax-deductible.

- If the value of your home rises, so may the value of your money.

- You might rent out the property to supplement your income.

For more information and to get through this process, contact your local accountants in the UK.

Contact Taj Accountants

Our specialist Accountants in London with their years of experience working with thousands of contractors can provide you with advice and tips on getting started as a contractor. They can also help you save taxes and improve cash flow. So, contact us and get on board. 

DISCLAIMER: The purpose of the blog is to provide information and insight regarding the situation. The readers must contact experts before making any decisions based on the information. We highly appreciate you contacting Taj Accountants for further assistance.