Commercial Mortgages

A commercial mortgage is a long-term loan secured against a non-residential property used for business, such as an office, shop, restaurant, factory, warehouse, or other commercial building. The property serves as collateral if you default (can't keep up with your repayments).

You make monthly repayments on a commercial mortgage over a set term, usually between 10 and 30 years, interest rates can be fixed or variable, and the loan amount is based on the property's value and your broader finances.

Commercial mortgages function similarly to residential mortgages, but have some key differences:

• Higher minimum deposits, often 25-30%
• Shorter maximum terms (usually 30 years)
• Stricter eligibility criteria based on your business's creditworthiness

Commercial mortgage lenders offer various types of mortgage products. Some of the more common options include:

• Owner-Occupied Mortgages - For purchasing/refinancing your own business premises. Typically up to 75% LTV.
• Buy-to-Let Mortgages - For financing properties to rent out commercially. Typically up to 70% LTV.
• HMO Mortgages - For houses in multiple occupations (HMOs).Typically 60% LTV.
• Short-Term Loans - Bridging finance repaid within 1-3 years. Typically up to 70% LTV.
• Development Loans - For financing construction/renovations. Typically up to 65% LTV.
• Portfolio Mortgages - For landlords with multiple properties. Typically up to 70% LTV.

With access to hundreds of lenders, we can aid you in finding the most suitable mortgage product for your specific commercial property goals.

For an in-depth understanding of what type of business loan may best suit your circumstances, it is recommended to work with an experienced business finance broker.

With a commercial mortgage, you will make monthly interest payments plus payments towards the principal loan amount. There are two main ways interest can be paid, and each has its benefits and drawbacks:

With an interest-only mortgage, your monthly payments only cover the interest owed each month. You do not pay anything towards the principal loan itself during the term.

At the end of the mortgage term, you will need to repay the original loan amount in full as a lump sum or refinance to a repayment mortgage. Interest-only works well when you expect property value to rise significantly.

With a repayment mortgage, your monthly payments cover both the interest for that period plus some capital repayment of the principal.

By the end of the term, the entire loan will be paid off through the combined interest and capital repayments. There is no lump sum due at the end.

Most lenders require a repayment mortgage. Interest-only is harder to qualify for due to the lump sum payment needed at the end. 

Applying directly through a lender involves considerable paperwork. Working with a specialist mortgage broker streamlines the process.

How does it work? And what does the process look like? - Here's a brief breakdown of what you might expect during the application process:

• Find a suitable property and make an offer conditional on financing.
• Approach a broker who will assess your situation and find appropriate lender options.
• The lender will evaluate your credit score, income, business accounts, existing assets/liabilities and the property itself.
• You'll need to provide a deposit of 25-30% and proof you can cover monthly repayments.
• The lender will carry out property valuations, anti-money laundering and fraud checks.
• If approved, you can finalise the purchase and mortgage account.
• Legal fees apply for conveyancing work. The broker can recommend solicitors.

From the initial inquiry, With Clifton Private Finance guiding you, the application process takes just 4-8 weeks from initial inquiry to mortgage offer. Depending on the complexity of the mortgage and what is required.

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We are financial experts, specialising in sourcing business finance across the UK.

We can help you:

• Understand what kind of loans you're eligible for and how much you can borrow.

• Feel comfortable with how the process works and explain any costs.

On your behalf, we will:

• Compare rates across the entire market (from private lenders to high-street banks)

• Negotiate the best deal for your circumstances

• Guide you through the application process

• Make sure your application is completed as smoothly and stress-free as possible