There is no mystery, there are no trick questions or red herrings; a commercial mortgage is simply a mortgage taken out on a commercial property whether this be purely for investment or for business purposes. A commercial property can consist of anything from an office block to a hotel. Basically any type of property which will be used in conjunction with trading as a business.
Much like someone entering into a traditional or buy-to-let deal, when taking out a commercial mortgage, the business in question must ensure that it can afford the maximum monthly repayments and take any interest rate fluctuations into account before committing to any particular product.
A commercial mortgage should also reflect the aspirations of the business. For example, any potential growth or streamlining should be taken into account as relocating, either upsizing or downsizing, can prove expensive. Commercial mortgage lenders are offered by many high street banks and building societies but as with a ‘normal’ mortgage, businesses have to satisfy their lending criteria in order to qualify and having an established relationship with a lender can help this process. Having a proven business will certainly help oil these wheels but new set up businesses can also be eligible provided they have a robust business model, a positive personal credit rating and clear evidence that the business is creditworthy, although some specialist commercial mortgage lenders may accept applications where there is an adverse credit history.
As you might expect, a commercial mortgage lender will demand that a business is both stable and profitable. It may ask to see a business plan and long-term financial projections to assure themselves that the business has, and will continue to have, the ability to make repayments on the loan. There are also a number of commercial mortgage specialists who may be prepared to be more flexible than their high street compatriots. Many of these deals are available though commerical mortgage brokers who specialise in the commercial mortgage market. A commercial mortgage broker will have a clear understanding of the market to illustrate the background and purpose of the loan as well as being in a position to offer persuasive evidence of the ability of the client to repay and the quality of the security being offered to the lender. They will also have access to an extensive panel of lenders who provide mortgages for businesses across a range of traditional high street banks and those specialist lenders who may consider those with previous credit difficulties, bad credit history or insufficient accounts.
Finding a good specialist commercial mortgage broker can be a challenge but fortunately cherryFind’s free service is specifically designed to help you find professional mortgage broker who specialises in commercial mortgages who will help you to achieve your aims.