Skip to content
Go back

Article Tags:

Please choose from the following:

Wesleyan Bank offers top five tips when selecting a commercial mortgage

Wesleyan Bank offers top five tips when selecting a commercial mortgage

Purchasing a commercial property is a significant financial investment, but can be a sound strategy to drive a business's growth and fulfil your career aspirations.

Despite some initial fears following the outcome of the EU referendum, the UK's £900 billion commercial property market is displaying signs of recovery. Investor appetite has returned and property valuers have dropped Brexit uncertainty clauses from valuation reports.

Choosing a commercial mortgage, whether it be to house a small business in its infancy or a large, well-established organisation, is a huge commitment but a decision which can offer many advantages.

However, attempting to compare how the product offering of various financiers is best suited to your firm can be confusing.

Wesleyan Bank offers the following top five tips and outlines the fundamental steps that business owners should take when applying for a commercial mortgage.

Look beyond the high street - Whether fixed rate or variable rate, not all commercial mortgages are created equal. High street lenders remain somewhat risk averse and more self-employed professionals are turning to alternative finance providers who can offer greater flexibility.

Whichever finance partner you opt for, make sure you can have detailed conversations with them so that they fully understand your business, its history and aspirations.
Get your house in order - Lenders require tangible evidence that your business can fulfil the monthly repayments so make sure you are prepared.

Before applying for a commercial mortgage, have all relevant financial documents to hand (bank statements, trading history, cash flow forecasts, tax returns, copies of sales contracts, asset and liability statements etc).

It's also essential that you are familiar with the premises of the commercial property you wish to purchase (size, number of units, location and nearby surroundings etc). This demonstrates a level of organisation and commitment to achieving your business's goals and builds confidence that you are worth backing.

Define your business strategy - Decide how you will be utilising the commercial property you wish to purchase as this will influence the terms and conditions you are able to negotiate. Some specialist lenders can offer loans of up to 80% of a property's value for owner-occupied trading premises, but this figure will drop if you have plans to divide your premises into smaller units and lease them to one or more businesses. 

Choose the right finance partner - Focus on more than just the rate when evaluating commercial mortgage offers. How long has the finance provider been established and do they possess an intrinsic knowledge and proven track record of assisting businesses in your industry of a similar size?

Experienced finance partners can provide a flexible and tailored solution and one dedicated point of contact who will work with you to ensure a smooth and seamless process from beginning to end.

Have one eye on the future - Taking out a commercial mortgage should be just one piece of the jigsaw as part of your overall strategy. Sustaining growth requires a financial commitment to new equipment, modern technology and people.

Alternative finance solutions include long-term loans to facilitate partner buy-ins and buy-outs, business acquisition and flexible solutions to fund the purchase of new assets (IT software and hardware, specialist equipment etc), to include building refurbishments or relocations.

Niche providers can also offer complementary products to support your commercial mortgage investment, including life assurance, mortgage protection, commercial property owners insurance and critical illness cover.

Commercial mortgage loans offer security and financial benefits for those who are seeking to purchase new business premises. Concerns over any sudden or unexpected rent increases are removed and borrowers can maintain greater control by having the necessary cash flow to invest in funding growth and expansion.

Furthermore if the property increases in value, business capital will go up and interest repayments on a commercial mortgage are tax-deductible.

From high street banks to specialist lenders, business owners have no shortage of options when perusing commercial mortgage providers. But it's important to choose a flexible financial partner who can provide everything you need under one roof to support you and your business going forward.

Want to know more about Commercial Mortgages?

'WESLEYAN’ is a trading name of the Wesleyan Group of companies.

Wesleyan Assurance Society and Wesleyan Bank Ltd are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Wesleyan Financial Services Ltd, Wesleyan Unit Trust Managers Ltd, Practice Plan Ltd and DPAS Ltd are authorised and regulated by the Financial Conduct Authority.  Advice about investments, insurance and mortgages is provided by Wesleyan Financial Services Ltd.

Click for more information about the Wesleyan group of companies.

© 2020 Wesleyan Assurance Society