Business or Commercial Mortgage Rates

Business mortgages, also known as commercial mortgages, are intended for companies or individuals who want to purchase a property that will be used as the premises for a business, or as an investment, as opposed to a place to live.

The amount that you can borrow with a business mortgage will usually not be more than 70-80% of the value of the property. However, at present a figure of 65% might be more realistic. Loans are typically granted over 15-25 years and sometimes up to 30 years.

Business mortgage rates depend on different factors to the rates available on owner-occupied mortgages. The lender will determine the rate charged based on the overall strength of the proposition that you make. It will take into consideration factors such as the strength of your business accounts, the amount borrowed and the loan to value.

Commercial mortgages are usually priced individually using the Bank of England base rate or the London interbank offered rate, which is the rate at which banks lend to each other.  The rate offered will be at a percentage above whichever rate is used.

The amount that can be borrowed is also worked out differently to an owner-occupied mortgage. The lender will consider what your business can afford based on its accounts or through rental income, as well as the value of the property and the amount of deposit available.

Some properties, such as nightclubs and petrol stations, are considered more high risk by lenders and so you will probably find that the cost of borrowing is more if you are looking for a mortgage against this type of property.

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