Business Mortgages
What is a Business Mortgage?
A business mortgage allows you to fund the purchase or refinance of a property that is used as a business premises. Business Mortgages are also a form of commercial mortgage and can be known as owner-occupied commercial mortgages. They can be invaluable to businesses as they grow.
Business Mortgages are different to regular mortgages because they are qualified against a company’s trading accounts/performance, as opposed to those qualified against individual owners. The chosen property can be purchased by an individual, a company, a pension vehicle or a charity, which goes on to allowing many positives, and can therefore prove to be extremely tax efficient.
Owning your own commercial premises can place a greater level of control over your finances as the costs will be fixed and will not be subject to rent increases etc like during a tenancy. If you purchase the property in an Investment company you can charge your trading business rent to cover the mortgage payments, off setting any extra costs to yourselves. This also allows for the property to be retained even if the business is sold.
Finding property finance for your business premises can be a challenging process especially with so many lenders in today’s marketplace. Our background and experience (as former lenders in commercial finance) and overall knowledge of the market, ensures our clients have full access to the whole spectrum of lenders available to them and their individual needs.
We have strong relationships with the main high street banks and many specialist lenders saving you time when approaching them yourselves.
Property types are often grouped as follows:
Hospitality:
Restaurants, Take-Aways, Café’s, Pubs and Night Clubs
Professional:
Dentist Surgeries, Doctor Surgeries, Veterinary Practices , Physio Therapists, Nursery/Day-Care Centres, Solicitor Practices, Accountancy Practices
Leisure:
Hotels, Guest Houses, Bed and Breakfasts, Apartment Hotels, Holiday Lodges/Parks, Golf Club Holiday Lodges
Main Stream Commercial:
Retail Units, Retail Parades, Retail Parks, Shopping Centres, Serviced Offices, Industrial Units, Retail Parks, Warehouses, Offices, Office Parks, Semi-Commercial Parades and Short Term Storage.
Specialist Property:
Agriculture & Farming Estates, Caravan Parks, Petrol Stations, Car Washes, Garages and Commercial Land.
Useful Information
Take a look at our Useful Information section for some extra guidance and insights about what you are requesting.
Lending Options
High Street Banks
- Typical Terms: Full repayment with a maximum loan to value of 75% (typically 65%) and up to 100% for professionals. Loans are based on full repayment also known as capital and interest. They range from 10 to 25 years which is capped by the maximum retirement age.
- Affordability: High-street lenders require a minimum of 2 to 3 years accounts lending, against the average net profit over this period. Mortgage interest can be added back on refinance, depreciation, rental (for purchases) and any one-off costs not associated with the day to day trading of the business. The lender will also deduct dividends/drawings or your required annual cost of living.
- Security: First legal charge and debenture over the trading company and property company (where properties are purchased in a different company to the trading entity).
Specialist Banks
- Typical Terms: Full repayment and interest only with a maximum loan to value of 75%. Loans are available on interest only, part repayment and full capital repayment with terms going up to 30 years.
- Affordability: Lenders require a minimum of 1 to 2 years accounts lending against the average net profit over this period. Mortgage interest can be added back on refinance, depreciation, rental (for purchases) and any one-off costs not associated with the day to day trading of the business. The lender will also deduct dividends/drawings or your required annual cost of living. They will also require your annual fixed living costs deducting these from the net profit unless there is other outside income.
- Leases: Personal guarantees with often no debenture required (this is useful when a business had other debt facilities).
Specialist Lenders (non-banks)
- Typical Terms: Full repayment and interest only with a maximum loan to value of 65%. Loans are available on interest only, part repayment and full capital repayment with terms going up to 30 years.
- Affordability: Lenders don’t require accounts and will consider forecasts or evidence of external income to service the loan.
- Security: Personal guarantees with often no debenture required (this is useful when a business had other debt facilities).
Next steps …
We have a lot of expertise in sourcing Business Mortgages for our clients, simply take a look at our Case Study section for examples or contact our team today so we can talk to you further about what you need.