Over the many years of our financial services experience we have found that many of our customers have similar types of questions. Why not take a look at some of our frequently asked questions and see if we are able to answer your questions about commercial mortgages.
For those looking for commercial finance on commercial property
As the name implies, a commercial mortgage can be used to purchase or refinance just about any type of non-residential property. Commercial mortgages are specialised as the lender has a legal claim over the property until the commercial loan has been paid off in full.
There are many benefits to buying commercial property using a commercial mortgage. The commercial mortgage payment is likely to be the same as the cost of renting the property, and you have the added financial bonus that you will eventually own the property. Also, if you rent a property then you are subject to rent increases which can harm your business. The interest payments on a commercial mortgage are tax deductible, which may help you to reduce your overall tax burden each year. If you have a large amount of commercial property then any unused areas could be sub-let to other companies, although this usually requires the permission of the lender.
With effect from 1st November, the FSA have decided that where the residential accommodation accounts for 40% or more of the property, then the latest residential mortgage regulations will apply. A solution could be to create a separate Leasehold Title for the residential property. This will split the property into two bits: one leasehold residential property, and one freehold commercial property. You can then apply for a residential and a commercial mortgage for the respective properties.