In This Article
What is a commercial mortgage?
Commercial mortgages in Dorset are similar to residential mortgages as the lender will want to assess you to ensure you have the means to repay the loan.
The mortgage is taken out in the name of the business or the name of the investor and the loan borrowed may be assessed on the income of the individual or the business.
In many cases, individuals purchasing a commercial property will use a commercial mortgage either as they may not have all the funds needed to complete the transaction without one or as they wish to retain their funds for investment in the future.
If you are planning to rent out the commercial property, bear in mind that you will need to declare the rent. Best to speak to a tax specialist when considering buying a property. Here is a useful link from HMRC about declaring rental income.
Commercial property transactions incur stamp duty costs, you can find more information here about stamp duty.
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What are commercial loans used for?
Commercial loans are used to purchase commercial properties, business premises and land. They are therefore a good way of purchasing commercial property if you cannot afford to pay for it in cash. Commercial loans may be used for the following:
- Blocks of Flats
- Buy to Let
- Commercial Investment Properties
- Development Finance
- Holiday Lets
- Industrial Investment (inc) Light Industrial
- Nursing/Care Homes Residential
- Professional Practices
- Public Houses
- Residential Investment Properties
- Semi-Commercial (residential houses/flats above or adjacent to commercial premises)
Where can I get a commercial Mortgage in Dorset?
If you want a commercial mortgage, you should speak with a mortgage adviser. The best type of commercial mortgages can be found by using the advice and services of mortgage brokers. They work for a financial institution or bank and can provide incredible solutions for your business’s needs.
A great mortgage broker will use their industry expertise to assess your situation, requesting any documentation required from you to work out options.
Most commercial mortgage brokers will be members of the National Association of Commercial Finance Brokers.
Is it easy to get a commercial mortgage in Dorset?
Is it easy to get a commercial mortgage? The answer to this question is not straightforward and yes, it really depends on the type of commercial property you are trying to secure financing for. However, you should be aware of how your loan will be underwritten and how that could affect your ability to get commercial financing.
Lenders look at the following when deciding to lend on a commercial mortgage:
- Loan to Value
- Credit Scoring
- Sector Experience
- Property Type
- Sector Type
- Interest Rates
Aren’t commercial mortgages expensive?
It is a very common misconception that all commercial mortgages are expensive, many people in fact assume that they cost more than any other form of loan which is not always true.
Commercial mortgage rates are calculated can be assessed on an individual basis and are designed to work with your circumstances not push you in to a loan that you may not need or agree with. Your adviser would find out about your situation and then get terms based on your scenario.
How much deposit do I need for a commercial mortgage?
One of the most frequently asked questions is how much deposit do I need to borrow. There are many reasons why this is such a common question, and they range from preconceived ideas that you must have a minimum of 20% deposit to the fact that banks tend to advertise the minimum deposit required rather than give a ball park figure.
The amount of deposit needed will vary depending on the type of property you are buying and borrowing against, but for the majority of commercial property, and in certain sectors, you can borrow up to 80% lending.
Your credit history can be a factor in how much of a deposit is required. If you think you have bad credit, it’s best to explore this first by getting a copy of your credit report from Experian, Equifax or Transunion.
Check My File shows you your report including data from all three of the above credit reference agencies.
Who is eligible for a commercial mortgage?
Commercial mortgages are available to all businesses including those that are partnerships or limited companies. They are also available to individuals purchasing a commercial property.
Can a first time buyer buy a commercial property?
Most lenders require applicants to be home owners and have experience in letting property especially when purchasing premises with a commercial element with a view to letting it out. Generally a first time buyer will be restricted from purchasing commercial property.
This can be different for first time buyers that have a successful business and now wish to purchase premises. If you’re a first time buyer and wish to discuss your options with a view to buying a commercial property, 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 uses one loan to purchase a property that has both commercial and residential parts. This is different than a fully commercial property since the proceeds of the loan are used to partially purchase a commercial property rather than for just the commercial portion of the property.
For properties that only have a very small commercial element, it may even be that a standard buy to let mortgage would qualify for the property depending on what it is. This is also the case for many blocks of flats depending on how many are within the building.
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Can I use commercial mortgages in Dorset for development or short term transactions?
Commercial development finance is used for building projects such as construction of housing estates or converting a building into flats with a view to selling them. These loans often roll up and are based on the future value of the development.
It is also possible to get a short term loan (bridging finance) to fund a commercial property purchase. This type of finance would be paid using a suitable exit strategy such as sale or a commercial remortgage.
Why have a commercial property in Dorset?
There are numerous reasons why commercial property in Dorset may be right for your business. As well as being a gateway to the South West and Southampton, the county is steeped in culture, heritage and history. With easy access to a range of services, means you may save money and grow quicker than anywhere else on the south coast.
Dorset is also arguably one of the best places to live in the UK, with gorgeous rolling countryside, the magnificent Jurassic Coast and great forests to wander through – not a lot could beat our stunning county. The above may not seem relevant but if having a business somewhere, why not choose somewhere that you love to be?!
If you’re thinking about purchasing a commercial property in Dorset, you might be wondering what it’s like to live here:
- Dorset has some of the most beautiful countryside in Britain (if not the world). Whether you like walking or horse riding, there are endless opportunities for getting out into nature.
- Coastline is amazing! From Chesil Beach to Lulworth Cove to Portland Bill, there are so many different beaches for you to discover. If you’re more interested in watersports than sunbathing then why not try surfing or kayaking?
- Have plenty of forests and woodlands for you to explore on foot or on bike (or even by car). The New Forest is one of the largest areas of ancient woodland in Europe and contains over 80% oak trees.
- Many local business owners have switched to industrial property in Poole & Sandbanks, Bridport & West Bay, Bournemouth, Wimborne Minster, Lyme Regis, Sherborne, Dorchester & Poundbury, Weymouth & Portland, Shaftesbury and Christchurch.
Dorset is a gateway to the South West and Southampton, the county is also steeped in culture, heritage and history.
Depending on your trade, it can be a great location for a commercial property. A commercial mortgage can help you purchase or finance an existing property.
Its generally best to speak to a mortgage adviser when looking for a commercial mortgage due to the complexities compared to a residential mortgage. Questions you should ask yourself 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. I NEED ADVICE will match you with an adviser that has access to major banks and Specialist Lenders within the UK.