Tips to Understand Commercial Mortgage

Commercial mortgages usually relates to lending for warehouses and factories, retail premises, offices, pubs, hotels, farms, investment property both commercial and residential, property development, professional practices, nursing and care homes.


Each category has its own lending criteria and terms. For warehouses, factories, offices and business units, lenders normally require confirmation that profits will be enough to meet monthly payments.

For owner-occupied retail premises, lenders will require evidence of successful historical trading and positive cash flow. For retail premises acquired for investment purposes, the loan terms may depend on the quality of the tenants. Arrangement fees of up to 1% are typical. Personal guarantees on the part of directors may be required.

It is usually best to approach your own bank first when looking for this type of borrowing as they will already have details of your incomes, assets and expenditures and credit worthiness. Then maybe approach a specialist commercial mortgage broker to see if they can find a lender that may improve on the offer from your bank.


Please note that this information is provided to give you a general understanding of the commercial mortgage scheme available in the market. It is not full guide to the commercial mortgage system and you should therefore base your mortgage decision on the information received from professional advice in order to determine the most suitable commercial mortgage for you.