Commercial Mortgages

1st Business Finance have developed relationships with a large number of commercial lenders who specialise in Commercial Finance. In turn, they offer us access to a wide spectrum of commercial mortgage loans, that cover the needs of a potential applicant. Whether it’s an initial mortgage loan or a remortgage on a commercial property – even additional funding for further business development and growth. We can help you meet your needs.

Commercial mortgages are designed specifically for investors or business owners of commercial property and operate in exactly the same way as any other mortgage. Funds raised can be used to invest in your business or even invest in other properties. Commercial loans are available against any kind of freehold or long leasehold property from many mortgage providers, all will require you to invest an applicable percentage of the purchase price.

Mortgages can be tailored in many different ways, however special consideration should be given to the actual type of interest charged and the repayment schedule. Note that interest rates tend to reflect the level of mortgage required. The main interest rate choice is usually between variable rate and a fixed rate options that are set against Bank of England Base Rate (BBR) or the London Inter-Bank Offer Rate (LIBOR) plus the margin the lender has applied.

Variable rate mortgages will move up or down in line with which rate mechanism your mortgage is tied to, whereas a fixed rate will not move for the term of the fix, 3 years for instance before reverting to the variable rate. Both choices have opposite advantages and disadvantages when interest rates move either for or against you.

In the end, only the customer can decide whether the certainty of a fixed rate is right for their circumstances or whether they expect interest rates are going to fall making a variable rate the most attractive commercial mortgage choice. As with all mortgages, the repayment schedule is typically for a 15-25 year period.

The mortgage itself can either be ‘interest only’ where the applicant is responsible for repaying the principle (“the initial loan”) at the end of the term or a repayment mortgage (“amortising loan”) where the principle reduces over time. The main point here is that you will pay more overall the longer the term of the mortgage.