As a business owner, you may find that you need to buy a property. Or two, or three. Depending on your business type, a property might be an absolute requirement (like a retailer), or it might just be nice to have a base to call your own. You may have decided you want somewhere to settle, which means buying premises instead of renting one. By buying a commercial property is a big investment, and if you’ve decided to do this, then the odds are you will need some help financing it. Luckily there are a lot of different options out there for financing commercial properties, each with its own advantages and disadvantages. And today, we’re going to explain what some of them look like, and when you might choose them.
Commercial Mortgages
Commercial mortgages are essentially like a residential mortgage, but for your business. Unlike residential mortgages, you can’t find rates online and buy based on that. Each commercial mortgage application is considered by a lender individually, and you will have to provide a lot of information to prove your eligibility. *
*Easy Street Financial Services Limited, t/a GP Norgate Financial Solutions, do not offer commercial mortgage advice. We would refer you to a trusted commercial mortgage adviser.
Bad Credit Mortgages
Even if you have a bad credit history, you can still get commercial finance. It just takes a bit more jumping through hoops, and a specialist mortgage and broker. If you have a poor credit history you will be seen as a high risk for lenders, so one option may be a bad credit mortgage. You may want to speak to a commercial mortgage broker if you need this kind of mortgage so that you can be sure you’re getting the right deal.
Multiple Property Mortgages
If you already own a commercial property and you’re looking to buy a second one, or you want to expand your current business into another property, you could qualify for a multiple property mortgage. This type of mortgage allows you to consolidate all of your loans in one place. This could potentially help cut the costs of having multiple mortgages and keeps your finances more organised.
Investment Mortgages
With interest rates still quite low, investment in commercial property can be a popular option for many. The investment mortgage is specifically for an investor looking to buy commercial properties, and could be a suitable option if you’re looking to build up a portfolio of commercial property.
Owner-Occupied Mortgages
Owner-occupied mortgages can be taken out on properties with up to four units, provided that at least one of those units is being used by the mortgage holder. So you could potentially buy a shop strip with four retail units, occupy one and rent the rest out, or similar but with office units or larger commercial spaces.
Buy-To-Let Mortgages
Looking to become a landlord? Then this could be the mortgage you need. Unlike a standard residential mortgage, a Buy-To-Let is tailored to fit the needs of a landlord, not a general occupier. This means they are more flexible, take into account things like higher rates of stamp duty for Buy-To-Let properties, and are perfect for purchasers who intend to let the property out as a form of income. *
*The Financial Conduct Authority does not regulate some forms of Buy To Lets.
Bridging Finance
Bridging finance is exactly as it sounds – it’s a short-term, interest-only finance option, that’s secured against land or property, and it provides a ‘bridge’ between you and your more permanent finance options. A standard bridging loan usually runs for up to 12 months and allows the lender to bridge a financial gap, such as covering a temporary cash-flow problem while another loan is pending. This option can be popular for businesses who are waiting for credit to become available when going through a property transaction – for example, if you’re buying new premises before your current one has sold and freed up the funds.
Auction Finance
For many people, buying property at an auction could be an attractive option. But it does take a bit of prep work since you need to have your funding arranged beforehand if you want to bid on a property. Many auction houses provide proof that you can in fact finance a bid before they even let you participate. Auction finance works on a similar basis as bridging loans – they provide you with the funds you need to be able to bid at auction, and cover you until your other finance comes into play.
Development Finance
Maybe you already have a commercial property, but you want to make some changes? Whether it’s a new build, conversion or just an extension, developing a property can cost you tens of thousands of pounds – which you may not have readily available in your business. Development finance helps you cover the shortfall and make those changes by securing a loan against the property or assets under development.
So you see, there are many different options available to you as a business owner looking to finance commercial property. There is no such thing as ‘just a loan’, and trying to figure out which option is right for you can be a confusing process. That’s where we come in. At GP Norgate Financial Solutions, we can help businesses understand their finance options. If you would like to know more about your finance options, just get in touch with us today.
GP Norgate Financial Solutions is a trading name of Easy Street Financial Services Limited which is authorised and regulated by the Financial Conduct Authority. Easy Street Financial Services Limited is a company registered in England and Wales with company number 6430453.
The registered office address is Basepoint, 377-399 London Road, Camberley, Surrey, GU15 3HL. There may be a fee for mortgage advice. The precise amount will depend upon your circumstances.
Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it.