In looking for a business mortgage there are a number of things that need considering before speaking to any lenders. You should make sure that you have the maximum deposit possible before seeking professional guidance.
Most business mortgage lenders expect a minimum deposit of 25%, as well as the reassurance that you will be able to repay your mortgage loan within the set term.
Finding the Right Business Mortgage Lender
It is of the greatest importance that you find a lender who understands the needs of your business. Business mortgage lenders tend to specialize in certain areas of commercial life and finding one that suits your business could make all the difference.
Click on the link to talk to our partners at B2B Mortgages.
It is recommended that you prepare so that you can accurately demonstrate a good business strategy in order to show your lender that your business is ready to grow and that you are financially able to repay the mortgage.
Lenders are Risk Averse
Most business mortgage lenders will assess each application for a business loan on merit before offering a quote. For example, the validity of your business plan and previous credit ratings may affect your lender’s decision to loan to you. All business mortgage lenders are risk averse and as such, they are unlikely to lend a business mortgage to someone who is unable to demonstrate adequate finances or business acumen.
It is important to consider the advantages and disadvantages in taking out a business mortgage before meeting with prospective lenders:
Your monthly payments may be less or equal to the costs involved in renting a business property
Your lender may allow you to sub-let any free space in your business property, allowing you to reduce your monthly payments
The interest you pay is tax deductable on business properties
You will not be subject to changes in the amount of rent you are expected to pay
The market value of your property is likely to increase naturally over time, allowing you to make a profit after you repay your mortgage and decide to sell your property
If you choose the fixed interest rate deal, your monthly repayments will not be subject to change, thus, you will gain greater control over your finances
A deposit of around 25% is required by most lenders and this is a relatively large amount for start-up business. You may wish to consider renting until your business can afford a larger deposit.
If you want to move and relocate your business, you may suffer a long and expensive process and it may be so that renting is a cheaper option until you are more settled.
The variable rate (Tracker) business mortgage means that your monthly payments are subject to changes in the Bank of England base rate.
Your property may decrease in value due to factors outside your control.
Maintenance costs such as decoration, security, fittings and fixtures will be your responsibility
It is also worth considering the fees that you may have to pay throughout the process of repaying your business mortgage loan:
With all of this in mind, you are ready to get the right business mortgage to help secure continued good fortunes for the company.