Commercial mortgages

Watts is the preferred commercial mortgage broker of Moneyfactscompare.co.uk 

What is a commercial mortgage?

While a residential mortgage can be used to finance your own home, a commercial mortgage can be used to purchase commercial property. Whether this be a shop on your town’s high street or a factory to add to your production line, a commercial mortgage is a secured loan which can help your business expand.

This means your mortgaged premises will be used as collateral on the mortgage, and if you fail to make the monthly repayments they could be repossessed.

Commercial mortgages offer fixed or variable rates. This means you can get security over your monthly repayments or opt for a deal which fluctuates, potentially in line with the Bank of England's base rate. 

When can I use a commercial mortgage?

Unlike a residential mortgage, commercial mortgages can be used for more than just buying property. They can also be used to expand your business in other ways, such as renovating your new premises or buying machinery to streamline your output. Generally, if you’re looking for a loan of over £25,000, a commercial mortgage could be the financing option for you. 

How to get a commercial mortgage

Before applying for a commercial mortgage it is important to remember commercial mortgage rates are set independently. This means your lender will need to consider a variety of factors before offering a deal, such as the amount you wish to borrow and the time taken to pay back your sum.

So, before applying for your mortgage it is important to ready your documents. These will typically include, but aren’t limited to:

• Proof of identity
• Proof of address
• Your business’s income and expenses
• Your business’s bank statements (Ideally look for at least three months’ worth)
• A detailed business plan
• Property details

What type of fees are included in a commercial mortgage?

Like a standard residential mortgage, a commercial mortgage often comes with several fees. For example, since a commercial mortgage is a secured loan, your lender will want to value your business’s premises. This means there could be valuation costs and arrangement fees for setting up the loan. More information on what these fees are can be found in our guide.  

Are commercial mortgages regulated?

For the most part commercial mortgages are unregulated. We say this because some unique scenarios are regulated by the Financial Conduct Authority (FCA), for example if your commercial mortgage is backed by your own home. This only represents a fraction of the market, so speak to an expert broker for peace of mind.