FUNDING FACILITY
Business Loan to Buy Property
Also known as a commercial mortgage, these loans are the next stage after a straightforward business loan if you’re looking for business financing for the property. Business loans tend to be unsecured, at least the amounts up to £350,000.00 are, but for larger amounts of money, lenders need to reduce any risk linked to a business loan to buy property.
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Business Loan to Buy Property
What is a business loan to buy property?
With a business mortgage like this, you’re looking at it lasting from 3 to 25 years, usually with a 70 – 75% mortgage. With investments, the amount you can borrow will depend on what the rental income is, although this will never be more than 65% of the purchase price.
investment mortgages. Owner-occupier mortgages are for buying a property that will be used as business trading premises. Commercial investment mortgages, however, are for properties you intend to let out.
When is a business loan to buy property used?
Business mortgages are pretty different from normal mortgages in that there’s hardly ever a fixed rate for business mortgages.
Also, commercial mortgages usually offer better interest rates than normal business loans because property collateral is involved.
This said, it’s worth bearing in mind if you’re acquiring a property via a business loan that you’ll pay more interest on commercial mortgages compared with regular mortgages for homes because they’re considered higher risk lenders.
The benefits of a business loan to buy property:
Firstly, you may not have known this, but the interest on your business mortgage is tax-deductible.
Also, the reason why people tend to decide to get business loans to buy property is that they’ll be able to rent the property out once it’s all sorted, therefore making it an extra source of income.
Finally, if the property you have bought goes up in value, the capital you have invested could also hopefully see an increase.
It’s pretty similar to applying for a regular mortgage but it might be a good idea to hire a specialist broker so they can help you ensure you find the most suitable lender for your situation. They can also help you with the application process.
1. Fill in and submit the Asset and Liability form, which can usually be done online.
2. Complete your commercial mortgage application form.
3. Provide the following information about your business:
– Bank statement covering the last three months
– Trading figures covering the last three years
– Proof of your identity and your current address
– Your lease and/or tenancy agreements
– Perhaps a business plan for your financial projections
4. The property you want a business loan for will then be valued.
5. The lender’s solicitors will then carry out necessary due diligence.
6. Then, if your application is approved at this stage, you will get a mortgage offer from the bank.
