What is Commercial Mortgage?
A Mortgage borrower in UK must have some clarifications about several aspects of the Mortgage process. Mortgaging in the United Kingdom has a lot of minute complications and there is a certain set of rules and regulations that both the Mortgage Lender as well as the Mortgage Borrower has to follow. Both these parties must know about the type of property which is going to be mortgaged. This article will explain Commercial mortgages in the UK and which all properties can be mortgaged under it.
Commercial Mortgage explained
There are several property types on which the mortgage can be taken like Private Property which is used solely for residential purposes, Buy-to-Let Property which is meant for renting out purposes, Commercial Property which will be used for business purposes, etc.
Commercial Mortgage, commonly known as Business Mortgage is a type of mortgage that is meant for a property that will be used for conducting business. A few examples of Commercial Properties in UK are Office buildings, Retail Centers, Shopping Centers, etc.
Process of Commercial Mortgage
The mortgage is borrowed from a bank, or a private entity like a financer, etc. A Mortgage Broker in UK or a Mortgage Specialist in UK can help you get a Commercial Mortgage at good rates. These entities do a special check and scrutinize the borrower. Here are some of the checklist of documents that a Commercial Mortgage applicant must have while applying for the loan:
- A fresh statement of liabilities and assets
- Expected figures for the future as well as for current
- Details of the directors and partners (if any)
- Statement of Tax Returns of previous 3 years
Term and Deposit of Commercial Mortgage
The term of the Commercial Mortgage depends on the agreement between the Mortgage Borrower and the Mortgage Lender. The term of the mortgage usually depends on the size and value of the property. In the majority of the cases, the term is between 15 to 25 years.
Deposits on the Commercial Mortgage can also vary from case to case, but a decent figure can be 30% of the property value. However, the type of business activity for which the Mortgage is applied, i.e., the risk percentage of the business operation plays an important role in calculating the deposit of the Commercial Mortgage in the UK.
