Business stability is incredibly important, especially when trying to ensure the long-term future of an organisation. An area that is often overlooked, but which is immensely important, is with the ownership of a commercial property. A business in a rented location has nothing in return for their payments whereas a monthly fee towards the ownership of a property will help to increase the equity of the business.
Of course, taking the decision to purchase a commercial property is the easy step the biggest issue will be finding the right finance option to fund the purchase. It will be very rare for a business to have the funds available to outright purchase a property, instead they will need financial help and the perfect solution is a commercial mortgage.
There are several commercial mortgage options available:
- Owner occupied commercial mortgage – used by the business for its day-to-day operations.
- Investment commercial mortgage – the financing of a property which is then leased out to business tenants.
- Buy-to-let mortgages – a business will purchase residential properties and then let-out to residential tenants.
- Mixed-use mortgages – ideal for when the property has both commercial and residential aspects for example a flat above a retail outlet.
- Property development mortgages – utilised to finance the construction of commercial and/or residential properties
Once a decision is made on the type of commercial mortgage required the next step is to identify who can help with this. There are again several options available:
- High street bank – historically the most popular choice as they can secure the best rates and terms for a business, however the application process and turnaround can be time consuming
- Specialist banks – often established to assist with more complex solutions such as commercial mortgages which results in them having more options available.
- Finance brokers – independent finance companies who adopt a whole of market approach and can match a business with a specific lender.
Having determined the best commercial mortgage option and the best funding choice the final stage is the application process. The steps are as follows:
- Identify the best funding option
- Make an offer for the commercial property
- Instruct professionals to undertake a valuation
- Agree the loan requirements
- Source and instruct solicitors to complete the deal
In conclusion there are broad benefits to purchasing a commercial property but make sure that you source the right mortgage.
If you have any questions or need some help with any aspect of business finance or accountancy our team would be happy to help. Please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk. You can also book a free 30-minute call with Yarka – https://calendly.com/yarka-ssa/30min
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