Compare Commercial Mortgages

The primary advantage of an owner occupied commercial mortgage is owning an asset that will appreciate over time rather than being a tenant, paying similar monthly rent payments that contribute nothing to your net worth. It leaves you in control of your space, taking away the worry of eviction, unwanted changes or rent hikes.

Some property investors will purchase commercial property with the intention of renting it to business owners while sitting on an appreciating asset. Rather than buying a commercial property using cash, an investor is likely to apply for a commercial buy to let mortgage to fund the purchase or to refinance a premises they already own.

Investors can use a commercial buy to let mortgage to finance properties they lease to businesses. Instead of purchasing a property outright with cash, many investors use a commercial mortgage finder to locate the best rates and loan structures. Commercial buy to let mortgage comparison tools allow investors to find lenders who offer flexible terms and competitive interest rates.

The investor may find ways to increase the rental yield as well as the value of the site by changing the use to better reflect the demand in the area. For example, a high street building used solely for retail may be adapted and converted to allow for residential dwellings that can be sold or rented out.

This will have quite a significant impact on the commercial mortgage rates that you’re likely to be offered. The more you have invested in the property the lower the risk to the lender, and they’ll reward you for that with a lower commercial mortgage rate. If you have the cash available, it’s worth putting a higher deposit down in order to get access to the best commercial mortgage rates.

If you’re an owner-occupier, the sector you are operating in is likely to impact your rate too, and again this correlates with the level of risk your business is deemed to be.

Commercial mortgage lenders will usually demand a higher rate for recession vulnerable sectors such as retail, hospitality, pubs and hotels. Although this may seem unfair, it makes sense as these are the areas of spending that are typically first to go when we get squeezed – so these businesses are deemed higher risk.

On the other side of the scale, if you’re in the market for a premises for your GP, Dentist Surgery or Veterinary Surgery you’ll see the best commercial mortgage rates as these are deemed essential services that aren’t likely to go under in an economic downturn.

Similarly to residential mortgages, you’ll find that fixed rate commercial mortgages are pricier than commercial mortgage variable rates – this is because you’re paying to be protected from base rate rises.

If you’ve operated in your chosen market for a while and have evidence of strong books (what commercial mortgage lenders like to call ‘sustained affordability’), you’re likely to be rewarded with a lower commercial mortgage rate.

The shorter the term, the better the deal in the eyes of your commercial mortgage lender. Not choosing the maximum term indicates that the deal is affordable for you, which means the likelihood of you defaulting is smaller – hence the lower commercial mortgage rate!

You’re likely to secure a lower rate in London than you would for the same premises in Scarborough for instance. Again, this ties into likelihood of business success and whether right or wrong, some areas are less vulnerable to economic downturns.

Perhaps not a term you’re familiar with so let us explain. This applies to buy-to-let commercial property. A commercial mortgage lender will look at the tenant you have in situ and assess the risk of them going out of business or falling behind on rent. Having a big brand like Lidl in your unit under a 15-year lease is much lower risk than having an independent tenant in situ. Investors who lease their units to big brands benefit from covenant strength and usually benefit from the best commercial mortgage rates.