Maybe more than you think. If it’s something you’re considering, do you know how you can find the best one? And if you have one, are you making the best possible use of it?
First of all, it’s worth highlighting the differences between commercial and residential mortgages, as there are some significant distinctions and it’s something we’ve found people often get caught out with. Residential mortgages are restricted to residential property, whereas with a commercial mortgage, you have a little more flexibility. It is possible to have both kinds of mortgage at the same time.
The following are some of the options you have with a commercial mortgage or remortgage, all of which will, of course, depend on your circumstances:
• If your financial circumstances have changed since you took out your existing commercial mortgage, remortgaging may allow you to negotiate a more cost-effective deal. It might be possible to find a deal with longer or shorter repayment terms, better interest rates or other advantages. Using an independent commercial broker will be a great advantage to you in this situation.
• It could help you free up equity from your business property. As we’ve seen in the housing market over the last few years, property prices can rise as well as fall. You may be pleasantly surprised at how much equity you have in your property, particularly if you originally had a low loan to value ratio on your commercial mortgage (the amount of the loan compared to the value of the property).
• If you own a business, you may find that it’s more tax efficient to borrow against the business rather than using money you have invested. This will depend on how your business finances are arranged, and we would always strongly recommend discussing this with your accountant as well as your independent commercial broker.
What can you do with the additional finance from a commercial mortgage or remortgage? There are a whole range of options, depending on what your aims and objectives are for your business. We can offer you a few examples from our clients to give you an idea of what can be achieved:
Consolidating debts:
If you have a lot of smaller debts and maybe an overdraft, it could be more cost-effective to bring these together under one loan with a better rate of interest and repayment terms. There is also the consideration for some people that it saves a certain amount of time and stress to have fewer payments to remember each month.
Expanding and investing:
Maybe you want to buy in some new equipment, purchase property to expand your premises or invest in your employees. A commercial mortgage or remortgage could be the most tax-efficient way of providing the capital for you to do this.
If there are other finance options more suitable for you, all good independent commercial brokers will tell you this and help you to secure the appropriate alternate financing.
So with all this in mind, you might be wanting to ask how the commercial mortgage or remortgage process goes. Another difference here between commercial and residential finance is the length of time an application can take. Generally, the commercial process is longer with the average time being approximately two to three months. Commercial mortgage applications are also looked at by an underwriter, rather than a computer process, and the information required is very different.
It’s also something we would highly recommend you use an independent commercial broker for as it can be a complicated process. Commercial lenders are very particular about what information they require and having an independent commercial broker can save you a considerable amount of time and money. They can also help to ‘future-proof’ your commercial mortgage as an integral part of your business plan.
For a free, no obligation discussion about your business finance, call Rebecca Bendle on 0800 0112825 or e-mail info@wwfp.net
Your property may be at risk if you do not keep up repayments on a mortgage or any other loan secured on it.
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