Can you get a mortgage to buy business premises?

TheSenSibleOne

Hi, Looking to know if its possible to get a mortgage on a place to start a business. Also what sort of rates would we be looking at?

Thanks

Dave_Ham

Would I be sarcastic if I said Yes - a business one...

On a serious note, you can get commercial finance although bigger deposits and higher, typically variable rates are on these...

Its almost a separate business commercial finance and there are brokers that operate solely in this sector - not me I am afraid...

ACG

You can but it would be a commercial mortgage. You need around a 30% deposit.
Im not sure what rates are but they would be higher than residential.

TheSenSibleOne

30% deposit? Is that the lowest and what are the chances of getting one compared to residential?

Also how would you work out how much you could borrow?

Thanks for quick replies

Dave_Ham

I would say 30% is the absolute lowest, although most of us just pass these leads onto specialist commercial brokers...

It will invariably be based upon profitability of the business, although when I have referred these they have wanted everything including full accounts for last 3 years.

I would imagine as with anything, the bigger your deposit the less they will want to see...

Quite often your business bank manager will have some good contacts in this area also...

ACG

Im with Dave on this on this, you need a Commercial Advisor.

We have a bloke in our company that does a fair bit of commercial i was speaking to him lastnight about one so i know the abosolute basics.

They would lend you about 3.75-4x your income.

But i think the minimum deposit is the 30%.

I could be very wrong but i suspect this forum isnt the best place for you, i think you might be best going to a commercial advisor.

TheSenSibleOne

ACG wrote: »

Im with Dave on this on this, you need a Commercial Advisor.

We have a bloke in our company that does a fair bit of commercial i was speaking to him lastnight about one so i know the abosolute basics.

They would lend you about 3.75-4x your income.

But i think the minimum deposit is the 30%.

I could be very wrong but i suspect this forum isnt the best place for you, i think you might be best going to a commercial advisor.

I figured the latter was true, though its an idea in the pipeline so just testing the water and seeing whats avaliable.

With two advisors suggesting the same sort of thing I feel alot more confident now.

Just need to find a commercial advisor now...

Thanks to both of you though

TheSenSibleOne

If we bought a residential property using a residential mortgage and then built the business on the land the property is on (keeping the house of course) would this then change the mortgage? Or would it simply be an addition to the external and so not affect said mortgage

same scenario, would it then be possible to convert part of the land to commercial and would this then need a change of mortgage due to change of use (even though we'd still be living in the house)

Thanks again

Itismehonest

It would probably be looked at as a mixed use property. I'm not sure how that would be looked at by your lender but, when wanting to sell, you may have to split the deeds & sell the house as residential & the other part as commercial.

ACG

If ou purchased the land and wanted to build on it you would need to get permission from the lender (probably not a problem) as well as planning permission with the council etc.

If you then wanted to split the deeds, again you would need permission with the lender - they are unlikely to accept this as it would most likely go down in value due to the loss of land, it also wouldnt make financial sense as you may be able to split the land and get a commercial mortgage on the new building to use towards buying the land off your existing mortgage...but it would be at a higher rate and would cost you more.

TheSenSibleOne

ACG wrote: »

If ou purchased the land and wanted to build on it you would need to get permission from the lender (probably not a problem) as well as planning permission with the council etc.

If you then wanted to split the deeds, again you would need permission with the lender - they are unlikely to accept this as it would most likely go down in value due to the loss of land, it also wouldnt make financial sense as you may be able to split the land and get a commercial mortgage on the new building to use towards buying the land off your existing mortgage...but it would be at a higher rate and would cost you more.

But it shouldn't affect the residential mortgage? We would be keeping the house and living in it etc.