The types of properties you can finance with a commercial mortgage include:

1. Offices
2. Retail stores
3. Shopping centres
4. Factories
5. Warehouses
6. Hotels
7. Hospitality venues
8. Residential developments

Commercial property mortgages do tend to be more complicated to acquire, so you’ll want to read through our how to get a commercial mortgage guide, or get in touch with one of our commercial mortgage brokers.

Commercial mortgages are used to:

1. 1. Purchase a property for your business
   2. Refinance a property to free up capital or get more favourable terms
   3. Develop or refurbish a property
   4. Invest in properties for your rental portfolio

Commercial mortgage rates can be much higher than residential properties, no matter why you need to take one out. To help get the most attractive commercial mortgage interest rates, you’ll need a commercial mortgage broker, and to pass the affordability checks.

You’ll also need a large deposit. Commercial mortgages typically require between a 20 to 40% deposit. How much of a deposit you need depends on your business’ performance. Companies doing very well will need smaller deposits.

To qualify for a commercial mortgage, and to get the best interest rate commercial mortgage available, you’ll need to:

1. Pass affordability checks (depends on cash flow and profitability, income projects, business assets, liabilities)
2. Have assets that you can put up as collateral (only essential in some applications)
3. Have a large enough deposit

Commercial mortgage brokers can help you put together an application that appeals to lenders, so you get more offers that, hopefully, work for your situation.

There are a few advantages of getting a commercial mortgage rather than another option, like an unsecured loan:

1. Lower interest rates: While commercial mortgage rates are higher than residential, they are far lower than unsecured loans since those have no collateral.
2. Long-term financing: A commercial buy to let mortgage gives property developers the ability to stretch out their financing periods, allowing them to make it easier to grow their portfolio.
3. Property ownership: Going with a commercial mortgage instead of renting means you’ll eventually own the property outright, adding to your list of assets while potentially saving you in high rental costs.
4. Capital growth: If the value of your property grows then you may be able to benefit from capital growth if you sell it.

A commercial mortgage, even a semi commercial mortgage, also comes with some risks and disadvantages.

1. Larger deposit requirements: Without government backing or support commercial properties need the standard 20% deposit. In some cases, the deposit requirements may even be larger.
2. Complex application: Commercial applications are far more complex than their residential counterparts, which can make them more difficult to acquire. That’s why you’ll want a commercial mortgage loan broker and advisor, who can help advise you on how to put together your application. For example, you’ll need to include business plans, cash flow projections, and financial statements in your application.