An Overview of the commercial mortgage
There are many reasons for buying commercial
premises. For example, you may be starting or buying an
existing business where the property is directly linked
to the business, such as a hotel, a retail outlet or a
takeaway. On the other hand, your existing business may
need bigger premises to cope with expansion.
If you decide to buy premises you'll probably need
to take out a commercial mortgage. Mortgages are usually
for 15 years or more and the property itself is at risk
if payments are not made on time.
Commercial mortgages can be used for a variety of
purposes, such as:
- the purchase of business premises
- expansion
- residential and commercial investment
- property development
Most banks and building societies offer commercial
mortgages, but you must satisfy the lenders' criteria.
Some lenders may accept applications where there is an
adverse credit history, but most require a positive
personal credit rating and clear evidence that your
business is creditworthy.
The lender's decision will also depend on your
current business circumstances - a commercial lender
will expect your business to be stable and profitable.
They may ask to see your business plan and long-term
financial projections, to assure themselves that your
business has, and will continue to have, the ability to
make repayments on the loan.
Some lenders impose restrictions on the uses of
commercial premises and certain business concerns may be
excluded altogether.
The terms of a commercial mortgage will depend
largely on the type of business you're running and the
type of premises or land you want to buy. This is a
complex area and it's essential that you seek specialist
advice from your solicitor and probably a chartered
surveyor.
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Reproduced with the permission of Business Link (http://www.businesslink.gov)
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