Evaluate commercial property mortgages
If you have an existing business account with a bank or building society, they may also be able to offer you a commercial property mortgage. Although this offer shouldn’t be dismissed, you also shouldn’t accept without exploring your options first. It is vital that you compare with other commercial property mortgage providers to ensure that you are getting the very best deal available for your business.
Make sure you can afford the repayments
Be sure to set a maximum amount for the monthly commercial property mortgage repayments that your business can comfortably afford. Remember, you could put your business and its assets at risk if you do not keep up the repayments on your commercial property mortgage.
Another thing to consider when setting your monthly commercial property mortgage repayment level is interest rates. While variable rates might be low at the moment, they may go up in the future, which could mean your monthly repayments will cost significantly more. A capped rate commercial property mortgage could be your best option; this gives you a payment ceiling if interest rates go up, but also allows your business to take advantage of the lower rates.
Ensure you budget your cash flow for a deposit on a commercial property
Lenders will generally require a sizeable deposit for a commercial property mortgage, with some lenders asking for deposits of up to 50 per cent.
The size of the deposit you will have to lay down for your commercial property will depend on a number of factors, including the type of commercial property you are looking to buy, and the amount of money the lender assumes that you can afford to borrow.
If your lender thinks you cannot afford the commercial property mortgage that you are applying for, they may reduce the amount of money that they are willing to lend your business. This essentially means that you will have to put up a larger deposit.