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Commercial property

Top 10 Commercial Mortgage & Property Finance FAQs

Don’t know where to start when it comes to commercial mortgages? Our commercial property brokers have pulled together the top 10 frequently asked questions.

  1. What is a commercial mortgage?

    A commercial mortgage is a loan used to finance the purchase of commercial property, such as an office building, B&B, restaurant, retail unit or industrial warehouse. The terms of a commercial mortgage are typically more favourable than those of a personal loan. It can be used to buy, refinance or redevelop the property.

  2. How much deposit is needed for a commercial mortgage?

    The amount of the deposit required for a commercial mortgage will vary depending on the lender, the property’s size and location, and the loan’s terms. Generally, a commercial mortgage will require a deposit of at least 20%, although some lenders may require as much as 40%.

  3. How much can I borrow with a commercial mortgage?

    The maximum amount you can borrow for a commercial mortgage will depend on the value of the property, your credit score, and the loan’s terms. You can expect to borrow anywhere from 50% to 80% of the property’s value.

  4. Who is eligible for a commercial mortgage?

    Commercial mortgages are available to a wide range of borrowers, including business owners, property developers, investors, and non-profit organisations. To be eligible for a commercial mortgage, you will typically need good credit and a healthy business or investment history. The applicant tends to be aged between 18 – 65 years old.

  5. How much money do you need for a commercial mortgage?

    The amount of money you need for a commercial mortgage will vary depending on the specifics of your business and the loan terms. You will likely need to provide a deposit of at least 20% of the total mortgage amount.

  6. Can a first-time buyer buy a commercial property?

    Yes, a first-time buyer can buy a commercial property. You will need to have a good credit score and be able to afford the monthly mortgage payments. Additionally, you will need to have a solid business plan and be able to show that you can generate enough income to cover the mortgage payments and other associated costs.

  7. How long does it take to get a commercial mortgage?

    Getting a commercial mortgage in place can take 4 – 10 weeks. It will depend on the lender and the complexity of the deal. At Evangate FS, we aim to respond to your mortgage enquiry within 24-48 hours so that a lender can quickly approve your commercial property finance.

  8. How long does a commercial mortgage last?

    A typical commercial mortgage has a term of 15 years, but it can be as long as 30 years. It’s pretty common for business owners to take shorter mortgage terms and then refinance the deal later.

  9. What commercial property fees will be incurred?

    In general, arranging a commercial mortgage will incur the following fees:
    Valuation fee – a panel of valuers will determine how much the property is worth in today’s terms.
    Lender arrangement fee – the lender will charge a fee for arranging the mortgage.
    Legal fee – both parties (lender and borrower) will require legal representation to ensure the deal is valid.
    Broker fee – most commercial property transactions involve a commercial mortgage broker to find the best lender at the lowest interest rates.

  10. Do you pay stamp duty on commercial property?

    Yes, stamp duty is payable on the purchase of all commercial property in the UK. The amount of duty payable depends on the purchase price of the property. Stamp Duty Land Tax (SDLT) in 2022 was 0% up to the first £150k, then 2% from £150k-£250k, with the remaining amount over £250k at 5%.

In conclusion, these are the top 10 questions that most commercial mortgage borrowers ask.

If you are considering a commercial mortgage or have any further questions, please feel free to speak to one of the team at Evangate FS.

We are here to help.

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