In This Article
What is a commercial mortgage?
If you are looking for a commercial mortgage broker in Devon, it would be best to fully understand how a commercial mortgage works.
A commercial mortgage is a type of loan that helps businesses finance the purchase of commercial property or to refinance an existing one. The lender will assess the borrower to ensure they have the means to repay the loan.
The mortgage is taken out in the name of the business or in the name of the investor and the loan borrowed may be assessed on the income of the individual or the business.
Individuals purchasing a commercial property may use a commercial mortgage because they cannot finance the entire purchase without one or because they want to retain their funds for future investment. Commercial property transactions incur stamp duty costs. Here you can find more information about stamp duty.
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What are commercial mortgages used for?
A commercial mortgage is a loan that is used to finance the purchase of commercial properties, businesses, and land. Commercial mortgages may be used for the following:
- Blocks of flats
- Buy-to-let properties
- Commercial investment properties
- Development finance
- Holiday lets
- Industrial investment properties (including light industrial)
- Nursing/care homes
- Professional practices
- Public houses
- Residential investment properties
- Semi-commercial properties (residential properties that are above or adjacent to commercial premises)
Where can I get a commercial mortgage?
For the best commercial mortgage terms, it’s recommended that you work with a mortgage broker. Mortgage brokers are typically independent so not working directly for the bank or one lender, and they have the expertise and industry connections to find you the most possible product.
They will assess your individual situation, request any necessary documentation, and work out the best options for your business.
Many commercial mortgage brokers will be members of the National Association of Commercial Finance Brokers.
How easy is it to get a commercial mortgage?
This depends on a number of factors, including the loan to value ratio, credit score, and ability to repay the loan. Additionally, the type of property being purchased and the sector it is in can also affect the lender’s decision.
The experience of the individual or business looking to occupy the building will be looked at as ultimately performance of this business will be generating the income to then pay the mortgage.
An experienced commercial mortgage broker will be able to work this out when they have a full idea of the scenario.
Is it expensive to get a commercial mortgage?
The answer to this question depends on the individual’s circumstances. Commercial mortgage rates can be affordable depending on the factors involved. You will find that they are usually more expensive than residential mortgages as commercial properties are higher risk to a lender and generally more difficult to sell if they take possession.
A commercial mortgage adviser can help find terms that suit your situation and advise all of the costs involved.
How much deposit do I need for a commercial mortgage?
For most commercial properties, you can borrow up to around 70% of the value of the property but this may be higher in some circumstances depending on the lender. The amount you need to borrow will vary depending on the type of commercial property you are buying.
A commercial mortgage adviser will be able to look at the situation to work out what lenders may consider lending on your case and then advise the minimum deposit that may be needed.
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Who can get a commercial mortgage?
Any business, including partnerships and limited companies, as well as individual purchasers of commercial properties, can qualify for a commercial mortgage. It will however depend on many other factors such as the experience of the individual / company, the credit history of the borrower, the building and the financials.
Can a first time buyer buy a commercial property?
A first time buyer may not be able to buy a commercial property because most lenders tend to prefer buyers with experience in letting property – especially when there is a commercial element involved. However, there may be some first time buyers that have a successful business and now wish to purchase premises. If this is the case, they should use the contact form to speak with a commercial mortgage adviser.
What is a semi commercial mortgage?
A semi commercial mortgage is a loan that can be used to finance the purchase of a property that has both commercial and residential parts.
A semi commercial mortgage is different from a fully commercial mortgage in that the loan can be used partially for a commercial property purchase, or for a property with a very small commercial element.
In some cases, a standard buy to let mortgage may qualify for the property, depending on what the property is used for. This is also the case for many blocks of flats, depending on how many flats are in the building.
Can I use commercial mortgages for development or short term transactions?
You can fund development or short-term transactions through short term commercial mortgages which is often referred to as development finance. Development finance can be used for building projects, such as constructing housing estates or converting a building into flats with the intention of selling them. These loans are often rolling, and based on the future value of the development.
It is also possible to get a short term loan for a commercial property purchase through bridging finance. This type of finance would be paid using a suitable exit strategy, such as sale or a commercial remortgage.
Why buy a commercial property in Devon?
The reasons for having a commercial property in Devon may vary depending on the person or business. Some may find that the location is more convenient for their needs, while others may appreciate the lower cost of living in the area. Whatever the reason, Devon provides many benefits for those who choose to have a commercial property here. Some of the best business areas in Devon are Plymouth, Exeter, and Torquay and the benefits of a commercial property in these areas include the following:
- Devon is a beautiful and popular tourist destination, so owning a commercial property here could mean increased foot traffic and business.
- The cost of living and doing business in Devon is relatively affordable compared to other parts of the country.
- There are a variety of different types of commercial properties available in Devon, so you should be able to find one that suits your needs.
- Devon is home to a number of businesses and organizations, so there is a potential for networking and collaboration.
I’m looking to buy a property in Devon. Does my mortgage broker need to be based here too?
No, you do not need a commercial mortgage broker in order to get professional advice about buying a commercial property in Devon.
Many mortgage brokers give mortgage advice remotely, so you should choose a broker based on their experience and skills rather than their proximity to you. Many brokers advise over the telephone, by email, and on Zoom to accommodate borrowers that could not otherwise be available due to work commitments.
If you feel that a face-to-face appointment is needed to make sure you understand the process, then you should select a broker that is close by.
If you do not feel you need this and want to get advice from a professional mortgage broker, I NEED ADVICE can put you in touch with one. Please fill out the form if you require this.
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If you are looking for a commercial property in Devon, it is a good idea to consider the benefits of the area. Devon is a beautiful and popular tourist destination, so owning a commercial property here could mean increased foot traffic and business.
Additionally, the cost of living and doing business in Devon is relatively affordable compared to other parts of the country.
Commercial mortgage brokers can offer a number of advantages over just visiting your own bank, including more flexible terms, personalised service, and access to a wide range of products.
They can also help you find the best possible rate and match you with the right lender for your needs. However, your broker does not need to be based in Devon.
Some questions you should ask yourself before speaking to an adviser are:
- Have you been let down by an existing lender or broker?
- Are you unhappy or have lost faith in the current lender relationship you have?
- Is the finance deal complex?
- Do you wish to obtain the best rates and terms for your commercial property?
If you answered yes to any of the above questions, please get in touch with us. We’ll match you with an adviser that has access to major banks and Specialist Lenders within the UK.