Why Now Is the Perfect Time to Take Out a Commercial Mortgage

Whether you’re looking to reduce your rental costs by purchasing your trading premises, looking to upsize to a more suitable space as your business expands or wanting to invest in a buy to let, commercial mortgages are a great way to facilitate these purchases.

The market can change unexpectedly, so you may be wondering when the best time is to take out a commercial mortgage. Well, at Ping Finance, we believe that there has never been a better time to take out a commercial mortgage than right now. Here’s an insight into what exactly a commercial mortgage is, what the advantages of one is and why you should be taking one out today.

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What is a Commercial Mortgage?

A commercial mortgage works in a similar way to a mortgage that you would take out to buy a home, but the property is commercial and must be used for business purposes rather than as a residence. The borrowed funds are secured against the property in the same way as a residential mortgage. Commercial mortgages are offered on terms lasting between three and twenty-five years and are typically flexible based on how you’re repaying.

There are different types of commercial mortgages used for a variety of purposes, but mainly they are used for facilitating the purchase of a property that you are planning to use yourself for your business or to rent out to others. These are the two most common kinds of commercial mortgages:

Owner-Occupied – This type of mortgage is for purchasing a property that you intend to operate your business within. This is often utilised when a company wants to acquire the space they are currently renting or to upsize following business growth.

Commercial Investment – If you won’t be using the purchased property yourself, this kind of mortgage is more suitable. These fall into the categories of commercial buy-to-let and residential buy-to-let. Commercial referring to letting the property out to another business, and residential being used by the likes of professional landlords wanting to purchase a property to let out to tenants.

At Ping Finance, we offer commercial mortgages offering up to 75% of the property’s value. The remaining value is required to be paid by the business.

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Advantages of a Commercial Mortgage

The main advantage of a commercial mortgage is that a business will own its own premises. You are no longer beholden to a landlord who could raise the rent at the drop of a hat; you will be investing in an asset that you will eventually own outright. Other advantages include:

  • Not having to pay rent can present huge savings, and often you may find that commercial mortgage repayments are cheaper than rent payments.
  • If you decided in the future that you no longer needed the property, you could sell it on or rent it out to other businesses.
  • Owning the property also allows you to make any changes you want to the space; you will have complete control.
  • Any gain in the value of the property will increase your capital.
  • With a set mortgage, monthly payments will be predictable.

Why Take Out a Commercial Mortgage Now

Of all the times to take out a commercial mortgage, you might be wondering if now is a good time or if you should keep waiting. Here are just some of the reasons we believe that you should be taking that commercial mortgage out as soon as possible:

  • Interest Rates are Low

Interest rates in the UK are incredibly low right now. Even with the tiny increase of 0.25% back in August 2018, the interest rate is still way below the average that it has been in the past, and this is only good news to those borrowing. Mark Carney, Governor of the Bank of England, has said that there would be a “gradual and limited” interest rate rises in the future. And with Brexit uncertainty on the horizon, future predictions are speculative at best, so there has never been a better time to take out a commercial mortgage than right now whilst we’re experiencing one of the lowest UK interest rates in history.

  • The Commercial Property Market Has Always Done Well

Between 2000 and 2018, the commercial property market has returned 308% to investors compared to 209% for the FTSE100, and yields have remained stable.

  • Competition Between Lenders

There is much competition between lenders who are all vying for your business. As a result, you have the luxury of being able to shop around for the best deal and not just settle for the first one you’re quoted.

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Commercial Mortgages from Ping Finance

There are a lot of lenders out there offering commercial mortgages, so making sure you choose the right one for you and your business is vital. At Ping Finance, we are commercial mortgage brokers that specialise in helping businesses and property investors source all manner of finance, from short term business loans to property finance, saving you time and money.

Our lending panel includes a wide variety of lenders such as high street banks, challenger banks and specialist lenders. We are independent and not tied to any lenders, in particular, so we will always work to get you the best possible deal.

We can help drive your next property deal through to completion. Our approach is personal; you will have a dedicate point of contact who will get your business and develop an understanding of your requirements.

Contact us today via phone or request a call back; we will work hard to get you the best commercial mortgage deals on the market and then, once you have made a decision, we will walk you through the process and get the funds into your bank account as soon as possible.

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