Commercial buy-to-let mortgages are used when an individual or a company purchase commercial property with the intention of leasing it out to another business. Consider it a buy-to-let mortgage for non-residential property.
A commercial buy-to-let mortgage can also be referred to as a business buy-to-let mortgage, a commercial landlord mortgage or a commercial investment mortgage.
What is a commercial buy-to-let mortgage?
A commercial buy-to-let mortgage enables companies and/or investors to purchase or refinance a commercial property that is then leased to a tenant, usually another business.
Commercial investment mortgages can be used for semi-commercial, mixed-use, or fully commercial properties. Types of properties being:
- Business – Single office units, office blocks, serviced offices, and business parks.
- Retail – Shops, single retail units, shopping centres, and retail parks.
- Industry – Industrial units and parks, warehouses, and factories.
- Leisure – Restaurants, pubs, cafes, and hotels.
- Health – Care homes, nursing homes, doctor surgeries, dental practices, vets, and opticians.
- Education – Schools, nurseries, and colleges
Who can get a commercial buy-to-let mortgage?
Due to the higher level of understanding required to operate mixed-use or commercial buildings, commercial mortgage lenders prefer applicants to have some type of prior experience in property investing or being a commercial landlord.
To improve your chances of receiving finance you will need to:
- Have a deposit of 25% - 35%
- Already be a homeowner
- Have owned a couple of buy-to-let properties for a minimum of 24 months
- Have money in the bank in the form of savings
- Show proof of your income, whether it’s from a salary, self-employment or rent
- Be able to show three years of accounts
If you don’t meet all the criteria mentioned above, don’t panic; there are still options out there, just bear in mind that it may cost you more.
Don’t be put off commercial property investment though because converting commercial to semi commercial property can be incredibly lucrative. Plus, it’s more accessible now thanks to the changes to permitted development rights and it is seen as a crucial way of transforming many of the UK’s dwindling highstreets.
Can I rent the property to my own business?
A commercial mortgage for an owner-occupied business would be used to purchase a property that your own company wanted to occupy. Though the shareholders and directors are the same, this still holds true even if they are two independent limited liability corporations.
It’s still a commercial mortgage though and much of the application process would be similar. The main difference being that your business would need to supply sufficient proof of profit and affordability instead of rental income and tenancy information.