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Commercial Mortgage

Author: Harry Jones And Facted Checked by : Shanie Capper
Last updated on : 21 August 2023

What is a Commercial Mortgage?

A commercial mortgage is a loan secured by commercial property, such as an office building, shopping centre, industrial warehouse, or apartment complex. The proceeds from a commercial mortgage are typically used to acquire, refinance, or redevelop commercial property.

Unlike residential mortgages, which are typically made to individual borrowers, commercial mortgages are often made to businesses. These can include corporations, partnerships, developers, funds, trusts, and any other entity that owns commercial real estate.

A commercial mortgage is a loan that is secured by commercial property or land, rather than residential property.

How Does a Commercial Mortgage Work?

Commercial mortgages are structured to meet the needs of the borrower and the lender. Key terms include the loan amount (sometimes referred to as “loan proceeds”), interest rate, term (sometimes referred to as the “maturity”), amortization schedule, and prepayment flexibility.

Commercial mortgages are generally subject to extensive underwriting and due diligence prior to closing. The lender’s underwriting process may include a financial review of the property and the property owner (or “sponsor”), as well as a third-party appraisal of the property.

While commercial mortgages can offer significant benefits, they also come with higher risk than residential mortgages. The borrowing entity is often a company or business, and the mortgage is secured by the commercial property itself. This can lead to a more complex repayment structure, with potentially higher interest rates or larger down payments required.

With this understanding of what a commercial mortgage is, let’s explore some of the companies that offer these types of loans.

Commercial Mortgages

 Commercial Mortgage Lenders in the UK

There are numerous financial institutions in the UK that offer commercial mortgages. Some of the most popular include:

  1. Lloyds Bank – One of the oldest and largest banks in the UK, Lloyds offers commercial mortgages for a wide variety of purposes, from purchasing new property to refinancing an existing loan.
  2. Barclays – Barclays offers commercial mortgages for properties worth £25,000 and above, with borrowing terms from 1 to 25 years.
  3. Santander – Santander offers commercial mortgages to help businesses grow. They provide funding for property expansion, relocation, and other business needs.
  4. HSBC – HSBC provides a range of commercial mortgages designed to help businesses expand or invest in property.

Please note that it’s essential to shop around and compare interest rates, terms, and fees before deciding on a commercial mortgage provider. This will ensure you get the best deal possible. A mortgage advisor can be extremely useful and save you money when you are looking for a mortgage.

Frequently Asked Questions About Commercial Mortgages

What is a commercial mortgage?

A commercial mortgage is a loan that is secured by commercial property or land, rather than residential property. It is typically used to buy business premises, develop a property, or fund a large-scale investment project.

How do commercial mortgages differ from residential mortgages?

Commercial mortgages differ from residential mortgages in that they are used to finance the purchase of commercial property. The borrowing entity is usually a company or business, rather than an individual. Additionally, interest rates for commercial mortgages are typically higher, and the repayment period is usually shorter.

How long can a commercial mortgage be?

A commercial mortgage can typically be taken out for any term from 3 to 25 years. The exact term length will depend on the lender’s criteria and the borrower’s circumstances.

What are the requirements for a commercial mortgage?

Requirements can vary between lenders, but commonly, lenders will look at the business’s profitability, the value of the property, and the borrower’s credit history. The business will generally need to have been trading profitably for at least a couple of years.

Can My Quick Loan help with commercial mortgages?

No, My Quick Loan does not offer commercial mortgages. However, they do offer quick loans today of up to £5,000, which can help meet smaller personal or business expenses. It’s always essential to assess the terms and ensure the loan fits your specific financial needs before proceeding.



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