6 Benefits of a Commercial Mortgage

In the dynamic landscape of business, securing the right financing plays a pivotal role in achieving growth and success. Whether you’re looking to purchase your own business property, expand your business or buy properties to increase your portfolio, a commercial mortgage can be a great way to fund this. A commercial mortgage provides a number of benefits to your business, and saves you from having to rent or take out alternative finance arrangements.

What is a Commercial Mortgage?

A commercial mortgage is a loan for businesses to buy, refinance, or develop properties used for business purposes, like offices or warehouses. The loan is repaid over time, and the property often acts as collateral.

Benefits of a Commercial Mortgage

Property ownership

One of the main benefits of a commercial mortgage is the opportunity to own the property where your business operates. Unlike renting, ownership provides stability, potential appreciation and the ability to leverage the property for various financial benefits.

Renting a property is generally seen as ‘dead money’ as you are effectively handing over your money to the landlord. Whilst renting commercial property suits a lot of situations, getting a commercial property will leave you with something to show for your monthly payments.

Lower interest rates

Commercial mortgages tend to have lower interest rates compared to other types of unsecured borrowing and business loans. Your commercial mortgage monthly payments are usually financially better than rent, leading to savings throughout your occupancy. When you are calculating your business outgoings, having fixed monthly payments with a commercial mortgage also makes it easier to predict and plan your expenses and resources.

Capital gains

Property prices have been on an increasing trend for a long time, so there is a good chance that the value of the commercial property you buy could rise. This could provide you with a lump sum when you sell the property, which you could invest or use as a retirement pot. However, you will be liable to pay capital gains tax on your profit from the property sale.

Make money through renting part of property

If you own the property then you are able to rent additional space or land that is attached to the property. You could make significant additional income by renting out offices, car parking spaces or storage space etc. If you are renting a property then you are generally not allowed to rent out space unless agreed with the landlord.

More control over building presentation

Your business premises can play a big part in the reputation of your business, particularly if your customers and clients visit your premises. If you have control of the building in terms of exterior displays, decorating and landscaping, you have full control over how professional your business is seen to be. If you are renting a property, the landlord has control over key aspects like decor, facilities management, external upkeep and everything else visual about the place. You might not get permission to display your signage how you would like or be able to customise it to your brand colours.

Provides flexibility

A commercial mortgage offers flexibility if your situation changes. You can pay off your mortgage early if you have enough money, but check with your lender for any fees. If things change before your mortgage term ends, like moving to a bigger space or closing your business, you can still manage payments by renting or selling the property.

Speak to a mortgage specialist

Are you considering taking out a commercial mortgage for your business property? We can help! Call us on 01508 483 983 or complete our callback form today to discuss your mortgage options.