Do you want to get a commercial mortgage loan on a property to expand your business? But you are not sure and you don’t have any idea about commercial mortgages. Then don’t worry because we will provide you with all the insights about commercial mortgage loans and how they work.

There are various factors that you should keep in your mind before getting a loan. And the main thing that you should keep in your mind is to get it from a good mortgage broker like Home mortgage care. In this article, we will be dealing with several information things related to commercial mortgages. Like the requirements, types, benefits, and several other details.

What Is A Commercial mortgage?

A commercial mortgage is a kind of loan that is secured on non-residential properties. Properties in which no one lives or is given for a business purpose. There are mainly two types of commercial mortgages and they are business mortgages and commercial investment mortgages.

Business mortgages are for the premises that are being occupied by an owner. and whereas the commercial investment mortgage is for a buy-to-let property.

Commercial mortgage loans are also used to expand an existing business. And they are also used for the development of commercial and residential properties. Commercial mortgages act as the main resource for any business and financing development plan.

A commercial mortgage is also a long-term loan that provides money to borrowers to purchase their business premises. Mortgage brokers like Home mortgage care lend approx. 7-% of the property’s value to the borrowers. And allows the business to pay regular mortgage payments so that they utilize the working capital and focus on their growth.

How To Get A Commercial Mortgage?

If you want to get a commercial mortgage without any failure then there are a few steps that you should follow. And those steps are listed below:

Step 1- search and find the best commercial mortgage broker in your area. Check if the services of home mortgage care are available in your area. Because we help the borrowers to get paired with the best lenders based on the circumstances of your company.

Step 2- Make sure that you fill up and complete the asset and liability form. By this, you can easily provide a piece of evidence about your company’s net worth.

Step 3- If your lender is happy with the proofs then he will approve it. And will call you to fill up an application form.

Step 4- After these things, your lender will gather information from you about your business income and expenditure. So that he can have a clear picture of how much you can afford.

Step 5- Your mortgage lender will ask you for your last three years’ financial records. To establish the evidence of the above-stated facts.

Step 6- The process of underwriting comes into play.

Step 7- A valuation takes place of the property that you are going to purchase. And a valuation will be carried out of your business as well.

Step 8- In this last and final step, the solicitors carry out their legal formalities, and complete the whole process.

This is the whole process of getting a commercial mortgage loan. Now let us read about the documents and requirements that are needed to get a loan on commercial property.

How do commercial mortgages work?

A mortgage loan on a commercial property works similarly to a residential mortgage works on a flat or house. The normal term of commercial mortgage loans is up to 25 years. In most the cases, the lenders allow the borrowers to take 70% of the value of their property. With the intention of getting it paid back in regular instalments.

In order to get the loan, you need to have a deposit. And you can also use another property of your own as a security if you have enough equity. The amount that you will borrow is the offset against the deposit that you have given down. You will have to pay the loan in regular instalments along with the interest.

If the lending company has offered you the loan on an internet-only basis. Then in such case, you just need to pay the interest each month. And you can settle your loan debt at the end of the loan period. The period or term of your loan can range between 3 and 40 years. Because terms less than 3 years are considered as bridging loans.

Requirements to apply for a commercial mortgage loan.

All commercial mortgage loans are different from each other because of which they have different requirements. Years in business, minimum credit score, term ad loanable amount all these things vary from lender to lender. But here we have listed some important documentation that most of mortgage brokers require during the process.

• You should have up-to-date tax returns, both personal and business.

• Financial and business records

• Keep both the bank statements, checking, and savings

• All the liability and asset statements

• Keep your financial history and profiles of all directors and business partners.

Types Of Commercial Mortgages.

Commercial mortgage loans are categorised into two different types, and they are:

Owner-occupied mortgages- These mortgage loans are mainly used by borrowers to purchase new property. Properties that will further serve as trading premises for your company.

Commercial investment mortgages – These types of mortgages are used by borrowers for investment purposes. They use these loans to invest in any commercial property that you might be planning to let out.

It is easy and possible to receive business mortgages loans at home mortgage care on a range of different properties, some of the examples are:

Office use properties- office blocks

Care homes- hospices, nursing homes, etc.

Agricultural property- farmland, farms, farm buildings, etc.

Industrial properties- warehouses, factories, storage facilities, etc.

Professional use properties- vets, Doctor’s surgeries, private schools, etc.

Leisure properties- pubs, restaurants, clubs, gyms, hotels, casinos, etc.

The price rates of these loans differ depending upon the type of property. If you want any of these loans then you can contact home mortgage care for hassle-free commercial mortgage loans.

Benefits of getting a commercial mortgage.

There are several advantages of getting a commercial mortgage. They do a lot more than just increase your business. Commercial mortgages are also seen as a source of business funding.

Owning a business premise ultimately means that you are minimalizing the risks of paying extra rental charges for your property. Commercial mortgages help in saving the future of your business by allowing access to equity as the price of your property increases over time.

There are several benefits of taking a commercial mortgage. some of those benefits are listed below.

• Helps in expanding trading opportunities

• It is cheaper than renting

• Helps in the purchase of new types of equipment

• Helps in releasing capital for growth or investment

• Consolidate the business debts

• Gives you the option of leasing or sub-letting parts of the property to increase or create an ancillary income.

Business owners can also use the commercial mortgage to buy new business properties for their business or for their own use, for buying a company, to rent out, or to unlock their equity within already owned buildings. Nowadays commercial mortgage loan has become a popular way for property purchase. If you have a business and you want to expand it then you can contact home mortgage care for loans.

How do you pay interest on a commercial mortgage?

Most commercial mortgage loans are paid by borrowers at a variable rate. A rate is always typically quoted as x% over the base or LIBOR. And this thing is commonly known as a tracker mortgage in residential terms. There are also fixed-rate mortgages that are available for a sum under 500,000 euros. These are advantageous because here the lender takes the risk upon themselves.

The business loans and the commercial loans are not like other normal personal loans. Because here the rate charged is not determined from the offset like a normal personal loan. lenders always carry a risk profile on their shoulders, and if by any chance your mortgage loan falls outside their risk profile it will be refused.

Other costs and fees in the commercial mortgage.

Other than the interest charges and loan repayments, commercial mortgage loans come with several additional costs and fees. Take a look at all those additional costs and fees that you will need to take into consideration during the whole process.

Valuation fees- The valuation reports are very stringent for all kinds of commercial purchases. These reports don’t affect residential properties much. The exact amount that you need to pay as a valuation fee is fixed on a case-by-case basis. And here unlike residential mortgages, the payment is mostly demanded in an upfront manner.

Legal fees- The legal fee is paid by the borrowers by themselves. They are also required to pay legal fees to the lenders where the total amount can vary. Mostly the legal fees start from 500 euros for each party.

Broker fees- Most brokers charge around one percent of the loan amount that you have taken. They take this charge for arranging your deal with the lender. The broker fees can vary depending upon brokers to brokers and the amount of loan that you have taken. The broker fees is always paid at last, when the deal is closed with the lender. And the brokers are supposed to return the advance charges in case of a failure.

Arrangement fees- The arrangement is paid after the completion of the deal. A normal charge of 1-2% of your total loan amount is being given. Small-balance mortgages usually have higher arrangement fees.

How does home mortgage care help?

Home mortgage care is extremely beneficial for those people who have an existing business and they want to expand it. Home mortgage care is the best mortgage broker that helps borrowers to get the best lenders. They make sure that the whole process of getting a commercial mortgage loan becomes easy and hassle-free. They have several contacts with big lenders that provide mortgage loans at less interest rates.

If you are someone who is looking for a commercial mortgage loan then you can get in touch with home mortgage care to get the best deal of your life.