Commercial Mortgages & Semi-Commercial Mortgages
Trading Business Loans & Commercial Investment Mortgages
- Commercial property is a broad term which can include retail units, restaurants, commercial units, factories, storage space and more.
- Semi-Commercial properties are properties which include commercial space as well as residential living space. This includes shops/offices with a flats above.
- Whether you are purchasing or refinancing, Clark Finance has access to a wide range of lenders offering competitive rates
Commercial Mortgages Explained
A Commercial Mortgage is a type of loan specifically designed for purchasing or refinancing commercial property, which is any property that is used for business purposes rather than personal or residential use. These properties can range from office buildings, retail spaces, and industrial units to larger developments like shopping malls, warehouses, or even hotels. Commercial mortgages are different from residential mortgages, as they are typically used by businesses, investors, or developers looking to acquire income-generating properties.
Property Types
Office Buildings: Used for businesses and professional services.
Retail Units: Shops, stores, or other commercial spaces.
Industrial Properties: Warehouses, factories, distribution centers.
Mixed-Use Properties: Buildings with both residential and commercial units, such as a shop with flats above.
Hotels, Hospitality, and Leisure Properties: Hotels, guesthouses, and other properties used for hospitality purposes.
Types of Commercial Mortgages:
Owner-Occupied Commercial Mortgages:
These mortgages are for businesses looking to purchase or refinance a property they intend to occupy themselves. This could be an office building, a factory, or a retail store. The business uses the property as its operational base, and the mortgage is secured against the property itself.
The lender assesses the business’s ability to repay the loan based on financial statements, business plans, and the property’s potential to generate income.
Commercial Investment Mortgages:
These are for property investors who wish to purchase commercial properties to rent out to tenants. This could include office spaces, retail units, or industrial properties.
The loan is assessed based on the rental income the property can generate, rather than the borrower’s ability to make repayments from their business operations.
Lenders will look at the market demand for tenants, the location of the property, and the stability of the rental income to assess risk.
Development Finance (Commercial Development Loans):
These are short-term loans for property developers to finance the construction or refurbishment of commercial properties. Development finance is usually provided in stages, with the loan released progressively as the project advances.
The borrower must usually present a detailed business plan and project budget to secure development finance, along with proof of the property’s potential to generate income once completed. Development loans are generally more expensive than standard commercial mortgages due to the higher risk involved.
High Street Lenders VS Challenger Banks
These are two types of banks which will lend on Commercial Properties and they both have different positives & negatives
This is a rough guide to both banks as they generally stick to these terms however they will on occasion make exceptions to these rules
At Clark Finance, we approach all of the main High Street Lenders & Challenger Banks to give you Indicative terms from banks who are willing to lend
High Street Lenders
- Capital & Interest preferred
- Typical 15 Year Term (Commercial Investment)
- Typical 20-25 Year Term (Trading Businesses)
Challenger Banks
- Interest Only Available
- Capital & Interest Available
- Larger Loans
- More Flexible Criteria
- Subprime accepted
Why not try buying using a Holding Company?
You can buy a property in several different ways
- Through your Trading Limited Company or LLP
- Through your Individual Names or Partnership
- Through a Holding company
- Using a OpCoPropCo - Operating Company with in a Property Company
- Using a SIPP or SASS
But why buy through your Personal Name or a Holding Company?
- You can pay rent to yourself or your holding company (tax advice is recommended)
- You can sell the business and retain the building to keep it as a pension later on
- Alternatively, you could sell the building and keep the business as a pension later on