General Posts

What makes commercial mortgages a good choice to expand your business?

Are you having trouble expanding your business? Are the rentals too expensive? Don’t worry! We’ve got you covered. Listen to the best commercial mortgage broker in toronto to learn how a commercial mortgage can help you grow your business. We’ll go through an extensive list of commercial mortgage benefits in this article. Find out the full list here.

What is a commercial mortgage?

Like traditional residential mortgages, commercial mortgages are secured by a property. Commercial mortgages, however, are used to finance the purchase of land or properties for commercial purposes. The money can either be used to develop a commercial property or to expand an existing one. Although commercial mortgages have a smaller share of the market, their value is high.

Mortgage financing is usually used to buy commercial properties, expand a buy-to-let portfolio, and develop a business. The lenders get security on their loans, and borrowers pay less in repayments. To put it simply, commercial mortgages benefit both lenders and borrowers. A commercial mortgage is usually a long term loan, and a borrower can borrow almost 70% of the property value.

Benefits of commercial mortgage

A commercial mortgage is a vital source of funding for your business, as it relieves you of the burden of paying high rent. A rising property price enables you to access equity and secure the future of your business. Here are a few benefits of commercial mortgages:

  • Expands your trade
  • Helps you buy new equipment
  • Released fund for growth or investment
  • Saves you from high rentals
  • Helps you consolidate business debt
  • Finally, allows you to lease property to create an additional income

Getting a commercial mortgage: Know these vital points

Various types of lenders offer commercial mortgages. Many lenders offer loans only if the borrower has a lot of assets to mortgage, while others only finance land properties. You must choose a lender that is right for you. The borrower must be prepared with three years’ worth of tax returns, current performance analysis, asset & liability statements, as well as details on your partners and directors. You should be familiar with these essentials when applying for a commercial mortgage.

Mortgage term: The term of a commercial mortgage can range between 5 and 40 years. Since these mortgages are a big responsibility, it’s important to understand your business requirements and what the lender expects.

Repayment: Interest rates of a commercial mortgage are higher than residential mortgages. Depending on the property’s value, you may also have to deposit at least 30%. However, the higher equity makes commercial mortgages lucrative.

Credit history: You must present your business plans and projections to borrow a commercial mortgage. The better your credit history, the better your chances of loan approval.

Stamp duty: You need to pay a land tax for your properties. The rate, however, varies significantly.

Interest rates: Interest rates change depending on the set rate at different times. You also have fixed rates for a time period.

Fees: Commercial mortgages also involve a valuation fee, arrangement fee, legal fee and an administration charge.

Tax: The interest for your commercial loans are tax-deducted.