This information should not be interpreted as financial, tax or legal advice. Mortgage and loan rates are subject to change.
If you are a landlord or property investor looking to buy a business premises, or a business owner looking to expand your business operations, you might need a commercial mortgage.
A commercial mortgage is a type of loan used to buy or refinance properties used for business purposes, such as office buildings, retail spaces, or warehouses. In this guide, we will explore everything you need to know about commercial mortgage lenders and how to find the best deal for your business.
Before we dive into the world of commercial mortgage lenders, let's define what a commercial mortgage is.
A commercial mortgage is a type of loan secured against a property used for business purposes. A semi-commercial mortgage is a building that combines residential and business use, for example a shop with a flat above. Read our guide to semi-commercial mortgages for more information.
Unlike residential mortgages, commercial mortgages are not regulated by the Financial Conduct Authority (FCA). This means that lenders have more flexibility in setting their terms and conditions (it also means borrowers are not protected by FCA regulations).
There are many commercial mortgage lenders in the market, ranging from high-street banks to specialist lenders. Here are some of the most common types of commercial mortgage lenders:
High-street banks are one of the most common sources of commercial mortgages. They typically offer competitive rates, but the application process can be lengthy and complicated. Moreover, high-street banks tend to have stricter lending criteria than specialists, which means that they might not lend to businesses with limited trading history or poor credit scores.
Specialist lenders are non-bank lenders that offer commercial mortgages to businesses that might not qualify for traditional bank loans. They can be a good option for businesses with unique financing needs, but they tend to charge higher rates than high-street banks.
Challenger banks are a type of bank that is new to the market and is trying to compete with traditional banks that have been around for a long time. These banks often use innovative ways of doing things to try and attract customers. They may offer competitive rates for specific niches.
Commercial Trust work's with a wide range of commercial mortgage lenders, including:
Commercial mortgage brokers are intermediaries that help businesses find the best commercial mortgage deal for their needs. They work with a panel of lenders and can help businesses navigate the complex application process. However, they typically charge a fee for their services.
Finding the right commercial mortgage lender can be a daunting task, but it's essential to secure the best deal for your needs. Here are some tips to help you find the best commercial mortgage lender:
Do your research
Research is key when it comes to finding the best commercial mortgage lender. Start by looking at the lenders' websites and comparing their rates and terms. You can also read online reviews and ask for recommendations from other investors.
Bear in mind though that there are a huge number of commercial mortgage lenders in the marketplace. Brokers are already familiar with lender offerings. They will quickly match you to a lender and deal, dramatically speeding up this process.
Some commercial lenders will only accept applications handled by a broker intermediary. So, in many ways, if you don’t work with a broker, you may be excluding options that offer you a better solution.
Consider your needs
Different commercial mortgage lenders offer different types of loans, so it's essential to consider your needs before choosing a lender. For example, if you're looking for a short-term loan, you might want to consider a bridging loan instead of a commercial mortgage.
Commercial mortgage lenders also have rules around the applicants or properties they work with, so you need to make sure you are a match before you apply or you could lose money on fees without securing a mortgage.
Make sure that you understand the interest rate, repayment period, and any additional fees. You can use online commercial mortgage calculators to compare the cost of different loans.
Check the lender's credentials
It's essential to check the commercial mortgage lender's credentials before applying for a loan. Make sure that they have a good reputation in the industry.
Get professional advice
If you're not sure which commercial mortgage lender to choose, you can seek professional advice from a commercial mortgage broker. They will help you navigate the wide range of lenders and products available and will take on the work associated with the complex application process.
When you work with our team of commercial mortgage experts, all the work is done for you. We will do thorough research, considering your needs, checking the lender's credentials, comparing rates and terms, to find the best you commercial mortgage lender and product for your needs and circumstances.
You can call us for free, talk to an advisor via our live chat service or submit an enquiry online for an advisor call-back.