What is a Commercial Mortgage?
The loan that is taken out to buy a business asset is generally termed as commercial mortgage. Commercial mortgages are used to buy offices,
shops, restaurants or other type of (generally) building. But they can also be used to buy other business assets such as plant or machinery.
As well as being a useful way of financing the purchase of business premises for a new business, commercial mortgages can also be an excellent
way of funding the expansion of an existing business. A commercial mortgage can also be used to fund investment in land or property which will be
used for commercial purposes.
Cost wise, a commercial mortgage is generally cheaper than a outright unsecured loan. This is because the mortgage is offered against some
business assets, and only if the business logic and makes sense, and business plan supports it. This also means that the payment terms are also
longer, generally 10 or more years. So the repayment amount is not that high, making a better option for a business' cash flow.
Can you remortgage an existing commercial mortgage?
Of course. If you already have a commercial mortgage on your company's business premises, you might find you could benefit from remortgaging.
A commercial remortgage allows you to unlock some of the equity that is currently tied up in your commercial property. It could also be a chance to
switch to a more competitive, cheaper mortgage, especially if your or your company's credit rating and business history have improved since you took
out your original commercial mortgage.
The money you free up through a commercial remortgage can be used for all sorts of things for your business. For example, you could purchase
additional stock, or invest in new machinery or other fixed assets such as vehicles. Another use for the extra money can be to pay off outstanding bills,
or clear other borrowings such as the company's overdraft.
Here are some typical uses for a commercial mortgage or remortgage:
- Borrowing money to buy