Mortgages for commercial property. Navigating the Landscape of Commercial Property Financing

22/04/2024

Welcome to the world of commercial property financing. This blog is to help you understand the financing options available for commercial property and allow you to make informed decisions for your property financing needs. Let’s break it down:

Whether you’re buying an office, shop, or warehouse, there are different ways to finance it.

Commercial Property Mortgages & Commercial Bridging Loans

Let’s dive into what each of these entails:

  1. Commercial Property Mortgages

What is a commercial property mortgage loan?

Commercial mortgages are loans specifically designed for purchasing or refinancing commercial properties, such as offices, retail spaces, or industrial buildings.

How do commercial property mortgages work?

Similar to residential mortgages, commercial mortgages involve borrowing money from a lender to buy a property. The property itself serves as security for the loan. These loans typically have longer terms than other commercial financing options, often ranging from 5 to 25 years.

Commercial Property Mortgage Features and Benefits:

  • Competitive Interest Rates:

Commercial mortgages often come with lower interest rates compared to other types of commercial loans, making them an attractive option for long-term financing.

  • Flexible Repayment Terms:

Lenders may offer flexible repayment schedules tailored to your financial needs and cash flow.

  • Diverse Property Types:

Commercial mortgages can be used to finance various types of commercial properties, including office buildings, retail properties, warehouses, and more.

  • Potential for Equity Build-Up:

As you make regular payments on your commercial mortgage, you may build equity in the property over time, providing potential for long-term wealth accumulation.

  2. Commercial Bridging Loans:

What is a commercial bridging loan?

Commercial Bridging loans are a short-term loan used to bridge the gap between the purchase of a new property and the sale of an existing one.

How does a commercial bridging loan work:

Commercial Bridging loans provide temporary financing to facilitate quick property acquisitions or to cover expenses during transitional periods, such as renovations or repairs. These loans typically have shorter terms than commercial mortgages, ranging from a few months to a few years.

Commercial Bridging loan Features and Benefits:

  • Fast Access to Funds:

Commercial Bridging loans can often offer expedited approval and funding processes, allowing borrowers to quickly seize investment opportunities or address urgent financial needs.

  • Flexibility:

Commercial Bridging loans are versatile and can be used for various purposes, including property acquisitions, renovations, or refinancing existing debt.

  • No Repayment Penalties:

Some commercial bridging loan options offer flexibility with repayment terms, allowing borrowers to repay the loan early without incurring prepayment penalties.

  • Potential for Higher Loan-to-Value Ratios:

Depending on the lender and the specific circumstances, commercial bridging loans may offer a higher loan-to-value compared to a commercial mortgage, providing access to greater amounts of capital.

 How to choose a business property loan?

Choosing between a commercial property mortgage and a commercial bridging loan depends on your specific financial situation, investment goals, and the timing of your property transactions. This is where Prydis can assist you, as an independent commercial finance broker we can help you navigate the complexities of these financing options and make informed decisions that align with your objectives. Contact Us for support today.

Refinancing Commercial Property

Already own commercial property? You might want to think about refinancing. This means getting a new loan to replace your old one. It can help you save money on interest or get cash out for other investments.

  1. Refinancing Bridging Loans:

What It Means: Replacing short-term bridging loans with long-term financing solutions like commercial mortgages or other loan products.

Why Refinance a Bridging Loan?

  • Extend Repayment:

Allows more time to sell the property without pressure.

  • Secure Better Terms:

Access lower interest rates or longer repayment periods for improved cash flow.

  • Access Equity:

Unlock equity for new investments or renovations.

  1. Refinancing Commercial Mortgages:

What It Means: Replacing existing commercial mortgages with new loans offering better terms or alignment with current financial goals.

 Why Refinance a commercial mortgage?

  • Lower Interest Rates:

Reduce monthly payments and borrowing costs.

  • Access Equity:

Unlock capital for growth or improvements.

  • Modify Loan Terms:

Adjust repayment schedules or switch to fixed interest rates.

In summary, whether you are looking to refinance a bridging loan or commercial mortgage, there are many lenders in the marketplace which makes it difficult to know which one best fits your specific refinancing needs. This is where Prydis comes in, we have access to an extensive network of lenders ranging from high street banks to challenger lenders, so we are perfect placed to source the very best terms and funding solution to refinance your property. What’s more, we can assist with a comprehensive range of commercial finance services, including Business Loans and Asset Finance.

To conclude, financing commercial property doesn’t have to be complicated. With the right help and a solid plan, you can make smart decisions and achieve your property financing goals. Contact us today and let’s get started!

Nick Cross

This article was written by Nick Cross

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