Commercial mortgages are used by businesses to either finance the purchase of business premises or to raise capital against existing premises to invest in expansion. Commercial mortgage lenders will require evidence that business performance over the preceding three years has generated sufficient profits to cover the monthly mortgage repayments.
You may also be expected to provide a business plan for the future of the business to demonstrate how the business intends to continue to trade profitably. These will be compared against other businesses in the same field. The level of risk assessed will be used to help calculate the interest rate charged on the mortgage offer.
For a sole trader of partnership, repayment liability lies with the individual or with all partners in the company. Some commercial mortgages will also authorise the lender to seize personal assets as well as the property to cover the outstanding mortgage and any foreclosure costs. If the business is a limited liability partnership or a limited company the liability belongs to the business rather than the individuals. However if the business is not well funded or highly profitable it is likely that the lender will require the mortgage be guaranteed against the personal assets of the director.
Please note that the information on this web-site is intended to provide an overview of the different types of mortgage available. Nothing on this website should be construed as advice and you should not make your mortgage decision based solely on this information.
TheRateTart recommends you consult an independent mortgage advisor to help identify the most suitable mortgage for your needs.
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