Commercial mortgages (also known as business mortgages) are a form of mortgage offered to business owners who want to raise funds secured against a property for business purposes – for example a buy-to-let property or an office. They work in a similar way to residential mortgages in that you borrow money that is secured against the property itself, offering an ideal solution if you are looking to expand your business or investment property portfolio.
There are two main types of commercial mortgage, each designed for differing business needs.
The first is an owner-occupier mortgage, a form of mortgage that a business owner may use to purchase a commercial property for their own business use. With commercial rental being notoriously high, this type of mortgage allows business owners to keep costs down while putting funds towards ownership of the property.
A commercial investment mortgage, more commonly known as a buy-to-let mortgage, is used to buy a property that you plan to rent out to tenants.
Swoop’s team of experts can assess whether you’ll qualify for a commercial mortgage – and ensure you’re matched with the right lender – as different lenders have different levels of eligibility. Your business will be analysed against a number of criteria to decide how much risk there is in lending you the money you need, for example:
If you satisfy the lender’s criteria, they will be able to offer you a mortgage.
When applying for a commercial mortgage, you will need to provide a number of documents in order to satisfy the lender that you will be able to pay off your mortgage as per the terms of the loan.
Your application for any commercial mortgage will not be successful if you are unable to provide the following:
The amount you will need to raise as a deposit for a commercial mortgage depends on the lender, but it is usually somewhere between 20% and 40% of the cost of the property depending on a range of factors including, but not limited to:
The size of your deposit is usually negotiable, and you can even get a commercial mortgage without a deposit (a 100% loan-to-value ratio) if you are able to provide additional security such as assets or other properties. While the lack of a deposit may be an attractive proposition, you should be aware that defaulting on the mortgage could see the property used as security repossessed.
Most lenders will allow you to pay your mortgage off early, but they usually charge an early repayment fee. Weighing up the pros and cons of paying off your mortgage early can be tricky; the lower your outstanding mortgage, the less you will have to pay in interest – but that could be offset by a high early repayment fee.
Some lenders place a yearly limit on how much you can overpay, with repayment fees only coming into play if you exceed this limit.
Use our easy commercial mortgage calculator to understand your monthly repayments, the total mortgage amount and how much you interest you will pay throughout the term of your loan.
Simply add the loan amount, the interest rate, the arrangement fee, and the term of the loan and away you go!
This calculator is intended for illustration purposes only and exact payment terms should be agreed with a lender before taking out a loan.
Monthly interest-only repayment
Total mortgage repayment