Pros and cons of buying business premises

* Introduction
* Overview
* What We Need to Know
* Pros and Cons
* Repayments
* Types of Lender
* Getting a Quote
Buying commercial premises can be a good investment - owning a property gives your business stability, and the property itself can become a significant asset. However, it is a major step, and before you commit it is important to think carefully about the pros and cons.

 There are considerable advantages to buying:

  • your mortgage repayment is likely to be similar to a rental payment on the same property
  • you aren't exposed to any hefty rent increases
  • you may be able to sub-let any free space that you might have - however, you will almost certainly require permission from your lender to do so
  • interest payments on a commercial mortgage are tax-deductible
  • any gain in value of the property will increase your capital

There are also disadvantages:

  • unlike renting, you'll need to come up with a substantial deposit - this is money that might be used for more important business purposes
  • if you own premises it's far harder to relocate your business, extracting yourself from a rental agreement is much easier than selling premises or finding a new tenant to take them over
  • if you have a variable rate mortgage, you are exposed to increases in interest rates
  • owning a property means you'll be responsible for factors such as maintenance, fixtures and fittings, decoration and security
  • any loss on the value of the property will decrease your capital


 

 

 
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Reproduced with the permission of Business Link (http://www.businesslink.gov)

The overall cost for comparison is 10.53% APR. The actual rate available will depend upon your circumstances. Ask for a personalised illustration. Early repayment charges apply. A broker fee of 1% may apply.  Your home may be repossessed if you do not keep up repayments on your mortgage.Our Financial Resources directory is available here