The Revolution team often receives refinancing enquiries, from businesses trying to compare a commercial remortgage with a loan, for a small business. Business Mortgages Compared to Small Commercial Loans This applies to any form of commercial lending, so it is always wise to seek independent advice before committing to any form of borrowing. Lenders will look at several factors when deciding whether to accept an application, such as:
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You could remortgage the existing mortgage, or take out a business loan if you're happy with unsecured borrowing rates, and need £25,000 or less.Įach option depends on the timescales and amount you need to borrow, and a professional commercial lending broker can help you identify the most cost-effective option. Pros and Cons of Remortgaging or Taking out a Commercial LoanĪnother scenario exists where you have an existing commercial mortgage, and want to raise more capital. However, business loans are generally not cheaper than a commercial mortgage for higher amounts of borrowing, as the interest rates of often steeper. Unsecured business loans are another option, whereby you use an asset or property as security, and therefore can borrow over and above the usual £25,000 maximum. It really depends on how much you want to borrow, and how long for. If you are deciding between renting or buying premises for your business to trade from, give the revolution team a call on 03 The best option when trying to weigh up the pros and cons of any business decision is to consult an expert who offers independent advice. If the property market dips, your building may decrease in value.The business will need to cover all the building repairs and maintenance costs.Relocations can be more complicated since you'll need to sell a property, which is likely to take much longer than ending a rental agreement.
You will need somewhere between 25% to 40% deposit.As the property grows in value, so too does your business equity and capital balance.Ĭons of Business Mortgages vs Renting a Property:.The interest paid on the mortgage is tax-deductible.Companies have control over how they use the space, including making changes and extensions to allow for business growth as an alternative to relocating.The business may sublet additional space to generate rent to contribute to the mortgage repayments, subject to lender permission.There is stability in budgeting for monthly repayments, without accounting for potential rent rises.Your monthly mortgage repayments are likely to be very similar to the monthly rent you would expect to pay.Pros of Choosing an Owner-Occupier Business Mortgage: There are several pros and cons between renting a property for your business and buying a property through an owner-occupier mortgage. Options include remortgaging existing properties, business loans, owner-occupier mortgages and commercial buy to let lending, so the right choice depends on your circumstances. If you have a deposit or assets to leverage.The first step to choosing the right form of financing is to understand all of the different commercial borrowing products available on the market.Įach option will have different costs, advantages and disadvantages, so you should consider: Here we run through all the pros and cons of commercial mortgages, and explain how these vary from other forms of lending.įor more advice about finding the right mortgage for your business, give us a ring on 03 or drop an email to Pros and Cons of Business Mortgage Lending Updated: Pros and Cons of Commercial MortgagesĬommercial mortgages vary significantly from domestic home lending, and the mortgage brokers team receives regular enquiries from clients wanting to know if this is the most cost-effective borrowing option. Author: Almas Uddin - Founder and Mortgage Advisor
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