Table of Contents:
- What exactly is a business mortgage?
- Is it possible to get a business mortgage if I have terrible credit?
- 6 Advantages of Using a Commercial Mortgage in Your Business
- Is a commercial mortgage the best option for my company?
What exactly is a business mortgage?
A commercial mortgage is a loan secured by a property you do not already own.
Buy-to-let mortgages vary somewhat in that they are a higher volume commercial mortgage offered to a volume market.
Is it possible to get a business mortgage if I have terrible credit?
Yes, you can receive a commercial mortgage if you have terrible credit; but, because of your credit score, it will be more difficult to get the loan. You may need to seek a specialized bad credit commercial mortgage lender in certain cases.
Because of your terrible credit, lenders consider you to be a bigger risk, which may cause the interest rate on the amount you want to borrow to rise. This is done so that they can recoup if you cannot pay.
6 Advantages of Using a Commercial Mortgage in Your Business
When purchasing a commercial property, you have the option of obtaining a commercial mortgage, which gives a variety of advantages to your company, as compared to renting the property or obtaining other financing arrangements. Here are some of the most significant benefits of obtaining a business mortgage:
- Interest rates are falling.
Commercial mortgages are more advantageous than unsecured borrowing since they are offered at lower interest rates than other forms of loans. Regular monthly payments for your commercial mortgage will allow for more precise forecasting when estimating your company outgoings. When you agree to a suitable commercial mortgage contract, the monthly payments will normally be less expensive than rental payments, so you will save money throughout the period of your occupancy.
- Gains in capital
Property prices have been rising for a long time; therefore, there is a significant probability that the value of the commercial property you purchase will grow as well. When you sell the property, you may get a lump amount that you might invest or utilize as a retirement fund. However, you will be required to pay capital gains tax on the proceeds from the sale of the property.
- They are not squandering money on rent.
Whether for residential or business reasons, renting a property is sometimes seen as ‘dead money.’ Renting involves passing over your money to the landlord instead of paying down the remaining balance on the house and gaining ownership. While renting business property is appropriate in many cases, purchasing commercial property will provide you with something to show for your monthly expenditures.
- Make money by renting out a portion of your home.
If you own the property, you may rent out more space or land that is linked to it. You may earn a lot of money by renting out offices, parking spots, and storage space, among other things. If you rent a property, you are typically not permitted to rent out space unless the landlord agrees.
- More control over the appearance of the building
Your business premises may have a significant impact on your company’s image, especially if consumers and clients visit your location to purchase items or have meetings. You have complete influence over how professional your company is seen if you have control over the building in terms of outside displays, décor, landscaping, etc. If you rent a building, the landlord has authority over crucial areas such as décor, facility management, exterior maintenance, and anything else visually related to the company. For example, you may not be able to show your signs in the way you want or customize them to match your brand colours.
- It is less difficult to get out of.
If you own the property and no longer desire it, selling it might be a lot simpler than breaking a business lease. Commercial leases are sometimes long, and it is difficult to break a lease early.
If you’re debating whether to get a business mortgage instead of renting or taking out another kind of loan, these six advantages should help you decide.
Is a commercial mortgage the best option for my company?
If you want to buy your own property, a commercial mortgage is a way to go. If you want to unlock the value of your current property, a commercial mortgage is also a good option for you and your company.