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COMMERCIAL MORTGAGES

Customers looking to purchase or refinance a commercial property have a variety of financing options available. Whether it’s an investment property with existing tenants or an owner-occupied property used for business purposes, Diamond Property Finance can help clients achieve their goals with the best rates in the market.

With our extensive experience and expertise, we’ll source the most suitable terms for our clients and offer competitive rates in the commercial mortgage market. Our process is refreshingly efficient, with clear explanations of terms and the collation of necessary paperwork to ensure successful completion.

  • Loans from £25,001 to £10M
  • Deposits as little as 25% as some banks can lend up to 75% against the property’s value (LTV).
  • We accept both purchase and refinance requests, with interest-only and capital repayment options available
  • Our services also include commercial purchases and refinances, investment properties and buy-to-lets for both new and existing tenants, and we accept many commercial property types.
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The different types of commercial mortgage

When committing to a commercial mortgage, there are two types of repayment methods to consider; interest only or capital repayment.

Interest only commercial mortgages allow investors to pay back the interest portion of the debt, without repaying the capital. Buyers are still required to pay back the full loan amount at the end of the term, but this is typically carried out by refinancing.

Capital repayment mortgages, either fixed or variable rate, see borrowers makes regular repayments to cover both the interest and the loan amount borrowed over the term. Fixed rate commercial mortgages offer investors the security of predictable repayments. Whereas variable rate commercial mortgages use a rate of interest that varies in accordance with lender’s base rate. This may result in the cost of your repayments fluctuating throughout the term.

The Commercial Mortgages Process

If you are looking to purchase or refinance a commercial property, our mortgage process will source a variety of financing options tailored to your personal and commercial needs. Talk to our commercial mortgage experts today to see how we can help your business grow. That said, here’s what you could expect:

  • Commercial mortgages can have varying term lengths of between 5 – 30 years
  • Typically, commercial mortgages have higher interest rates compared to residential mortgages
  • 70-75% Loan to Value (LTV) available

FREQUENTLY ASKED QUESTIONS

What is commercial mortgage?

A commercial mortgage is a loan secured by commercial property, such as office buildings, shopping centres, industrial warehouses, or apartment complexes. Unlike residential mortgages, which finance personal homes, commercial mortgages are tailored for businesses and investors looking to purchase or refinance properties for commercial use.

How to get commercial mortgage?

To obtain a commercial mortgage:

1. Assess Finances: Evaluate your business’s financial health and ability to repay the loan.
2. Property Search: Identify a suitable commercial property.
3. Lender Selection: Choose a lender that specialises in commercial mortgages.
4. Application: Complete the lender’s application process, providing financial documents.
5. Property Valuation: The lender assesses the property’s value and potential income.
6. Approval: Upon approval, finalise terms and conditions.

How does a commercial mortgage work?

Commercial mortgages work similarly to residential mortgages but are tailored for business properties. The borrower receives a loan, and the property serves as collateral. Repayments, including interest, are made over an agreed-upon term. The income generated from the commercial property often contributes to servicing the mortgage.

How long is a commercial mortgage?

The term length of a commercial mortgage in the UK can vary significantly. While residential mortgages typically have a standard term of 25 to 30 years, commercial mortgage terms are generally much shorter, ranging from 5 to 30 years, with some extending up to 25 or even 30 years. The specific term length offered can depend on factors such as the lender, the size and value of the property, and the borrower’s circumstances. Additionally, the term length may not significantly affect the interest rates, as long-term commercial mortgages often come with similar rates to shorter-term ones. The availability of fixed-rate commercial loans and the maximum loan-to-value (LTV) ratio can also vary depending on the lender and the borrower’s situation.

Are commercial mortgages cheaper than residential?

Commercial mortgages tend to have higher interest rates than residential mortgages. The increased risk associated with commercial properties and business ventures contributes to these higher rates. While terms and rates vary, it’s common for commercial mortgages to have slightly higher costs compared to residential mortgages.