A Commercial Mortgage – Start Your Own Business Right Away

One of the greatest obstacles to startup businesses is paying rent for their spaces. For this reason, getting a commercial mortgage to purchases space for your startup can be a huge step forward. This will solve most of your startup needs and also provide room for new opportunities. But first you have to know;

What is a commercial Mortgage?

Basically, a commercial mortgage is used for purchasing property or land for commercial or business purposes such as an office building, shopping center. Commercial loans can also be used to refinance or redevelop a commercial property. Commercial loans are similar to most traditional mortgages in that they all involve borrowing of money and security on the money borrowed.

However, unlike the traditional mortgages, commercial law entails; purchasing business spaces, creating an owner-occupancy business, securing land for future development and giving room for buy-to-let.  A Commercial mortgage is structured in such a way that it benefits both the borrower and the lender. How? The lender gets security on the money they give whereas the borrower benefits through minimized repayments. In addition, commercial mortgages are long-term, between 5years and 20 years hence the business can eventually be able to purchase the space.

Starting a business with a commercial mortgage

Most startups with no trading history will find themselves in need of a lower loan-to-value ratio whenever they want to purchase spaces. However, traditionally most lenders accept security from an already existing property, simply because most businesses are rich in assets but poor in cash.

Therefore, as startups can use existing property such as your residential homes when getting a commercial mortgage. Some lenders will also be flexible enough to allow you negotiate the deal further when the required equity levels are reached. This can be of great benefit to your business’ financial future. How? In case the property’s price rises the business’ value rises with it. In addition, whenever the equity levels go up, you can use it for business financing in terms of expansion and growth. However, in the case of refurbishing premises, you can use bridging loans to save you the cost.