A business mortgage, also referred to as a commercial mortgage, stands as one of the prevailing financial options for acquiring commercial property and land.
Term for these last up to 25 years, it serves as a cornerstone for businesses seeking to invest in property or land.
However, for those requiring shorter-term financial solutions for property purchase or refurbishment, avenues like development loans or bridging finance may be more suitable.
Functionally akin to residential mortgages, commercial mortgages entail monthly repayments covering both the principal amount borrowed and accrued interest. The extent of financing relative to the value of the commercial property defines the loan-to-value ratio (LTV), with many lenders willing to extend up to 75% of the property’s total value.
Accessing a business mortgage hinges significantly on your company’s trading history. Lenders scrutinize your ability to manage the mortgage and meet repayment obligations, typically necessitating two to three years of filed accounts.
As a form of secured finance, a commercial mortgage requires collateral, typically the property or land being purchased.
This collateral serves as a safeguard for the lender; in the event of default, they reserve the right to seize the asset to recover their losses.
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