Are commercial property mortgages regulated?
No. Generally speaking, these mortgages are in the realm of unregulated lending; there may be some cases where they're regulated (such as if you were buying a property to live in as well as run a business from, in which case the waters become slightly murkier), but this is the exception rather than the rule. This makes it even more important to speak to a broker who's a member of NACFB for complete peace of mind.
Can I refinance my business mortgage?
Yes. In much the same way as in the residential sector, it's perfectly possible to refinance this kind of mortgage, in that you'll pay off your existing loan by replacing it with a new one. This may be to free up cash or secure a better interest rate, but while it's possible, it doesn't mean it'll be easy – it could be an expensive process as you may be hit with early repayment charges and new booking fees, for example, so make sure to weigh up the pros and cons of refinancing.
Can I get a business mortgage with no deposit?
Occasionally, but not very easily, and you'll usually have to stump up something significant as security (such as another property or other assets).
Is business mortgage interest tax deductible?
Why are commercial mortgage rates higher than for residential mortgages?
A lot of it is down to risk and the terms of the mortgage itself. With mortgages for business, the ability of a borrower to make repayments is dependent on the performance of the business, and if it doesn't perform, the bank will have limited assets from which to make its money back. It's also harder to assess the creditworthiness of a business, particularly a new one, and terms tend to be a lot shorter, too.
Can I get a buy to let commercial mortgage?
In essence, a commercial investment mortgage is a buy-to-let mortgage for commercial tenants, with only the terminology being different. In traditional buy-to-let, a private landlord rents out a property to residential tenants, whereas under a commercial arrangement, the property is let to a commercial enterprise. Nonetheless, the term "buy-to-let commercial mortgage" is rarely used, as it's simply thought of as a commercial investment loan.
How long are commercial mortgages?
Typically, commercial mortgage terms are five to 30 years. Some lenders have an Early Redemption Charge (ERC) it typically starts at 5% when you first lock into the mortgage and then reduces during the fixed loan period, but because commercial mortgages are bespoke products and not pre-packaged, this is often negotiable at the outset with most lenders.
Are commercial mortgages interest only?
Not generally. When giving a commercial mortgage, lenders want to see their money being fully repaid - both capital and interest. However, with investment mortgages, lenders do understand the tax position of their customer, so in these cases they will help by not insisting on capital repayment so long as the LTV is below a certain amount (often 60%), allowing the borrower to pay interest only.
Can you get a commercial mortgage without any accounts?
A lender will require to see proof that the proposed loan would be affordable to the borrower, to do this the lender will normally ask to see the last three years’ accounts to prove this. If you’re business has been trading for less than three year will not be about to show the accounts needed, however exceptions can be made and a professional standard business plan would be essential in arguing the case for loans where affordability is not readily apparent.