A commercial mortgage is aimed towards people buying property for business/commercial usage. The mortgage is ideal for people looking to set up business or expand their existing premises.

The following lists examples of properties you would want a commercial mortgage for, whether it is for ownership-occupation or for investment purposes:

Shops

Industrial units

Warehouses

Offices

Garages (not petrol stations)

Pubs, restaurants and hotels

Care homes

Day care nurseries

Recreational businesses

Farms, farmland and farm buildings

Rural diversification

Horticulture

There are many types of mortgage options available to borrowers from different lenders.

Borrowing amount - this may vary from lender to lender but a typical amount would be from £25,001 to £15 million.

Repayment period - this would be between 5 to 25 years, some lenders may consider lending you up to 30 years.

Repayment options - many lenders may tailor you repayment plan according to your cash flow situation. Partial lump payments can be offered with no redemption fees. Ask about interest only periods as this may be attractive to start up businesses.

You will find that many lenders will offer competitive LTV rates for commercial mortgages. The amount given by the lender will depend upon different factors, these will differ from lender to lender depending on their criteria, but they will all look at the basic elements of the property.

The property must meet certain requirements set by the lender in order for them to lend you a higher amount. If the business was not to succeed then the lender must ensure that they will get their money back from the sale of the property. This is why the state of the property is a key factor as it works as a baseline. Most properties are renovated after purchase increasing in value.

The maximum most lenders will lend you would be 75% of the property price. You may find lenders who may be willing to offer you more but always do your homework and consult a mortgage advisor before applying.

Interest rates can be paid through either a variable or a fixed basis.

Variable rates - this is a negotiated percentage which would be placed on top of the base rate set by the Bank of England. Once the percentage has been agreed it will not change during the life of the mortgage.

Fixed rates - this would vary throughout the commercial mortgage life as the fixed rate is only for a certain period.

For more information about taking out a commercial mortgage call our advisors on 0800 1777 497 or alternately fill in our free advice for a mortgage broker to give you a call back.