Your commercial property finance options explained

Your commercial property finance options explained

There are many reasons for needing to finance a new commercial property. Maybe your current premises are not fulfilling requirements anymore? Or you are looking at buying premises for the first time? Are you looking to increase your existing commercial property portfolio?

Whatever the reason, you will need to acquire some commercial property finance to get the ball rolling. This guide will explain the common finance options available on the market:

Commercial mortgages

Whether you are self-employed sole trader or director of a limited company there is a range to quality commercial mortgages available on the market. It is common for commercial mortgage lenders to fund up to 75% of the property purchase costs on up to 30-year terms. Affordability is based on your ability to make monthly payments and business profits. Finance is usually secured against the first charge.

Bridging finance

This short-term finance option is a favourite amongst property investors and developers because of it being a quick way to secure a property purchase. With bridging finance, a lender will take a first payment on the purchase and then exit once the loan as been fulfilled.

Portfolio lending

Portfolio lending allows property investors with several properties to consolidate their borrowing into one loan. It is a long-term finance option and will be determined based on the income from the rental properties.

Development finance

This is usually a short-term loan to be used for the refurbishment of an existing property or the development of a new building project where the lender will often advance up to 70% of the development cost. Development finance terms can be anything up to 24 months.

Auction finance

Auction finance sets you up with the necessary funds before the hammer falls on a commercial property auction. Mainly used by experienced landlords and property developers, it arms them with the correct finance to meet the property value before they enter the auction house.

If you are still unsure about what commercial property finance you need for your property purchase, get in touch with our expert advisors.

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