A commercial mortgage is any loan secured on property which is not your residence. Buy to let mortgages are a special type of high volume commercial mortgage which is packaged for a volume market.
Commercial mortgages generally take over where business loans finish.
Smaller business loans are unsecured, but for larger amounts lenders need security in order to reduce the risk to themselves.
A business mortgage usually lasts over a longer period of time.
A business mortgage plan differs from a regular mortgage in the following ways:
- There are usually no fixed rates for commercial mortgages
- You’ll usually pay a higher interest rate on commercial mortgages compared to regular home mortgages as these are considered higher-risk to lenders
- Commercial mortgages tend to offer better interest rates than regular business loans as these require property as collateral
Here are a few reasons why you might want to think about taking out a commercial mortgage:
- The interest on your commercial mortgage is tax-deductible
- If your property increases in value, your capital could also see an increase
- You’ll be able to rent out the property to generate extra income