Most businesses need a commercial space that will allow it to operate comfortably each day and potentially expand over time. Whether this is a typical office space, a warehouse, a retail unit, or any other type of commercial building, funding is a key consideration.
If a business owner wants full control over the building they operate from, or for any other reason do not want to rent premises, then funding may be needed to help buy or remortgage premises. The appropriate product for this is a commercial mortgage.
In addition to providing the business with the space it needs to operate each day, commercial property can also play a key role in the growth of towns and cities. This post will explore commercial mortgages and look at their role in supporting regional investment. Read on to find out more.
What is a commercial mortgage?
First, it is helpful to define exactly what a commercial mortgage is. Essentially, this is a mortgage that helps business owners or property investors pay for a business premises. Sometimes called a business mortgage, loan sizes typically start from £30,000 and terms can be from three to 25 years.
Commercial mortgage lenders typically require a deposit of between 25% and 40% of the property value. Lenders will also consider either a) the potential of the business, if the property is being bought by a business owner or b) the rental potential, if the property is being bought by a property investor.
How commercial mortgages support regional growth
As mentioned above, commercial mortgages are not just a useful financing tool for buying or remortgaging a commercial property. They can also play a key role in supporting local economies and facilitating regional growth.
The East Midlands hosts a number of significant household names from the commercial industry. The headquarters of pharmacy and health and beauty retailer, Boots UK Limited, clothing retailer Next PLC and homewares retailer Dunelm can be found in the region.
Engineering experts, Rolls Royce Holdings PLC operate in Derby and car manufacturer Toyota also has a vehicle plant in the city too. Credit data and analytics company Experian PLC has its headquarters in Nottingham. Construction company Bowmer & Kirkland has its head office in Heage. Being well placed for logistics, Amazon and DHL have significant operations in the East Midlands too.
Commercial mortgages enable business owners to establish companies and create jobs. Similarly, investors can use commercial mortgages to purchase property that can be used to bring new businesses to the area. This can channel investment into towns and cities, which can stimulate growth. This is particularly important in areas outside of London where growth is needed.
Types of commercial mortgages available
As has been alluded to above, it is also helpful to be aware of the different types of commercial mortgages that are available, so that you can find the right option for your needs.
Owner-occupier mortgages: Designed for business owners purchasing their own commercial spaces to operate from.
Commercial investment mortgages: Mortgages for property investors looking to buy a commercial space to let to a business (or multiple businesses) for rental income.
Semi-commercial or “mixed-use” mortgages: Mortgages designed for buildings with both commercial and residential space.
No matter what kind of commercial mortgage you need, it is important that you can secure the best option. This is why it is a good idea to speak to a commercial mortgage broker like Commercial Trust. They have specialist advisors who can understand your requirements and then find the best possible deal from a wide range of different commercial mortgage products, as well as help you secure a lender decision in principle.
Commercial mortgages are important financial products for business owners and investors, but they are not just a tool for investing in commercial property. Commercial mortgages can also stimulate growth and provide stability in local communities at a regional level.
