A commercial mortgage is a long-term loan that’s provided to business owners and secured against a property. In the UK, it’s usually available for 70-75% of a property’s value and is repaid over a period of between three and 25 years.

There are two main types of commercial mortgage to choose from:

Owner-occupier mortgage - This is secured against a property that’s being used for your own business. Commercial investment mortgage - Also known as a commercial buy to let mortgage, these are designed for those who want to buy a property and rent it to someone else.

It’s important to know that the type of business mortgage you choose will influence how much you can borrow. It could also affect the amount of interest you’ll be asked to pay. Most commercial investment mortgages require a larger deposit, and you could end up paying a higher interest rate.

You can take out a commercial mortgage loan on both an interest-only and capital repayment basis. Interest-only commercial mortgages can help keep monthly payments low, which can make them appealing from a cash flow position - but you’ll need to repay the full loan amount at the end of the mortgage term.

With so many financing options out there to help you grow your business, how do you know when a commercial mortgage loan is the right choice? For smaller sums, you may be able to take out an unsecured business loan. But if you’re looking to borrow a large amount of money, your lender will want security. And that’s where a business mortgage comes in.

Perhaps you’re after a commercial mortgage to buy a property you already occupy, or that you intend to move into. Or, maybe you want to buy commercial property as an investment. Either way, business mortgages can help you secure the cash you need.

There are several benefits to owning a commercial property. For starters, if it increases in value, you’ll see a return on your investment. Also, you’re also protected from risks such as unexpected rent increases. Depending on the type of commercial mortgage you take out, you may even be able to rent out your property to bring in extra income. And remember, any interest paid on a commercial mortgage is tax-deductible.

We know that transparency around any extra costs is key. You’re probably more likely to find lower interest rates on a commercial property mortgage than you would with an unsecured business loan. But you’ll also need to bear in mind that typical commercial mortgage rates in the UK tend to be higher than they are for residential mortgages. They also depend on your lender’s assessment of your ability to repay the loan.

In the UK, commercial mortgage rates vary – so, much like a tracker mortgage for a residential property, they go up or down. Usually, you’ll be charged interest at a percentage above LIBOR - an average of rates charged by several banks in London - or the Bank of England base rate.

You may want to keep a little extra cash to hand for any additional fees to take out your commercial mortgage loan. Most lenders will charge an arrangement fee of between 1-2% of the loan amount, payable once a mortgage is approved. You’ll usually also need to pay a valuer to visit the property, and legal fees to arrange the loan.

When you compare business mortgages with Think, you can save yourself the hassle of dealing with a traditional broker. Our team uses cutting-edge iFunds technology to compare from our panel of lenders and find a package that works for you.

Be sure your paperwork is all up to date, as your business will undergo a series of checks by lenders that you’re eligible for a commercial mortgage loan. They might look at things like your cash flow and debts, projected future income, the size of your deposit, and any rental income that will be generated by the property you want to buy.

When you know the results of these checks, you’ll have a clearer idea of the commercial mortgage rates that are available to you. If you have a bad credit rating, you may still be able to secure a commercial mortgage, but you may be charged a higher rate of interest. If you haven’t been in business very long, you may also be asked to offer a personal guarantee - meaning you’ll be personally responsible for repaying the loan.

Whatever your situation, the team at Think Business Loans will be on hand to support you. We’ll perform a thorough assessment of your needs and use smart technology to find a business mortgage that suits you.

In short, yes. There are a few reasons why you might want to pay off your existing commercial property mortgage and take out a new one - for example, to release some cash or to negotiate a better interest rate. But there may also be fees or charges to pay.

Things to check include whether your existing lender will charge an early repayment fee. You should also calculate the fees involved in arranging your replacement business mortgage. Will these outweigh the savings you make by striking a new deal?

Deposits are common for commercial mortgage loans. But how much you need to pay can vary dramatically, depending on your circumstances and needs.

Most business mortgages require a deposit of between 25-40%. If you’re after a commercial investment mortgage, meaning you’re planning to rent the property to someone else, you’ll need to put down a slightly larger deposit than if you were to occupy it yourself.

It’s rare, but in some cases, lenders may agree to issue a commercial mortgage without a deposit. In this instance, you might need to offer another property as security against the loan.

Yes, commercial buy-to-let mortgages are available in the UK. We tend to refer to these as commercial investment loans.

Applying for this type of mortgage means going through the same process as for a property you intend to occupy, but you’re likely to need a larger deposit and may be asked to pay a higher mortgage rate.

If you’re not sure whether a commercial property mortgage is right for you, there are plenty of other business finance options available to help you grow your business.

For example, asset finance can be used to release cash from your existing assets or allow you to invest in additional equipment. Or you could take out a bridging loan, providing short-term financing to complete the purchase of a property while another sale goes through. There’s also the option of an unsecured business loan, which might meet your borrowing requirements without the need for a deposit.

Whatever your ambitions or requirements are, the team a Think are ready to help you find a solution that meets all your needs.

We know that your business is unique. That’s why we kick off the process with a quick phone call to discuss your requirements. We’ll then use our iFunds matching technology to perform a search of business mortgages from our panel of UK lenders. This means we can use real quotes and available options to find a solution that matches your needs.

Something to keep in mind is that lenders require several documents from you to process your application. Some of these will depend on the type of mortgage you’re applying for, but it’s normal to provide the following:

• Proof of identity and address
• At least three months’ bank statements
• Company accounts for the last three years

To help you save time and hassle, we’ll handle everything once your application is approved - making sure you receive the funds you need. To find out more about business mortgages, give the team at Think Business Loans a call on 0203 880 9880.