6 Benefits of a Commercial Mortgage

Commercial property

When you are buying a commercial property, you have the option take out a commercial mortgage that provides a number of benefits to your business, as opposed to renting the property or taking out alternative finance arrangements. Here are some of the top advantages of getting a commercial mortgage:

Lower interest rates

In comparison to unsecured borrowing, commercial mortgages tend to be more favourable i.e. they are available with lower interest rates compared to other types of loans. When you are calculating your business outgoings, having fixed monthly payments for your commercial mortgage will enable more accurate forecasting. When you agree a good commercial mortgage deal, the monthly payments will usually work out financially better than rental payments, so you will be saving money over the term that you are occupying the building.


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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.

Not wasting money on rent

Renting a property, whether it is for residential or commercial purposes is generally seen as ‘dead money’. Instead of paying off the outstanding amount on a property and taking ownership of that property, with renting you are just 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.

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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, 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 are coming into your premises either to buy products or for meetings. If you have control of the building in terms of exterior displays, decorating, landscaping etc. 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 business. You might not get permission to display your signage how you would like to or customise to your brand colours, for example. 

It is easier to get out of

If you own the property and no longer want it, selling it can be much easier to get out of than some commercial leases. Commercial leases are often lengthy and you will find it hard to leave a lease early.

If you are contemplating whether to take out a commercial mortgage rather than renting or taking out another form of finance, these six benefits should help you make your decision.

Gerard BoonB.A. (Hons), CeMAP, CeRER

Gerard is a co-founder and partner of Boon Brokers. Having studied many areas of financial services at the University of Leeds, and following completion of his CeMAP and CeRER qualifications, Gerard has acquired a vast knowledge of the mortgage, insurance and equity release industry.