Commercial Mortgage Loan Terms
Following the pandemic, we’ve been increasingly receiving more enquiries from business owners asking about mortgage term loans to help finance their commercial properties. To assist other prospective commercial borrowers, we wanted to take the opportunity to provide an overview of how commercial mortgage loan terms work.
As experienced specialists in commercial mortgages, we are well placed to explain to you all about commercial mortgage loan terms, and how as one of the UK’s leading commercial mortgage brokers, FC Funding can find the right loan solution for you.
Contact us today to discuss your commercial mortgage loan options.
What is the standard term length of a commercial mortgage?
When it comes to commercial mortgages, there is no set standard term length. Loan terms can range between 5 and 25, and sometimes even 30 years. Nowadays, we’re seeing a trend of commercial loan terms varying from 10 to 20 years.
Does the term length affect the commercial mortgage loan rate?
Essentially – no.
Whilst it will be determined on a case-by-case basis, long term commercial mortgages come with the same rates as shorter term ones.
Are fixed commercial loans available?
Yes, they are obtainable and the majority of lenders now offer fixed rates. The rate can typically be fixed for up to 10 years but some lenders may offer a 15 year fixed rate.
Once the fixed rate is up you would then be put onto the lenders standard variable rate, or you can look at a remortgage / product switch if you still wanted a fixed rate for your commercial mortgage.
What about higher LTV commercial mortgages?
Loan-to-value (LTV) refers to the relationship of the loan against the market value of the asset or property.
For commercial investment mortgages we can raise up to 75% LTV, lenders do also offer owner occupied commercial mortgages at this level as well. This varies on your operating industry or sector, and there are specialist lenders who can help. We suggest contacting us to discuss your options, as this will be dependent on a case-by-case basis.
How do I get the best rates on commercial mortgages?
The key to getting the best rate possible, depends on your eligibility and affordability criteria – and these tend to be based on the following:
High credit rating score
Whilst specialist bad credit lenders exist, we recommend having a clean credit rating as this shows lenders that you’re low risk.
Previous property experience
Like before, specialist first-time / start up investors are available, but having a solid track record in the relevant industry will also be an encouraging sign for a lender.
Good deposit and security
Commercial mortgages typically require a 25-35% deposit, but adding more deposit or putting up extra security / collateral will reduce the level of risk involved, leading to lower interest rate offers.
Business stability and profitability
It’s also worth noting that lenders will look to assess the profitability of your business to gauge whether or not you can afford the remortgage repayments. Having evidence that you own a sustainable and liquid company with projected profits will show lenders that you will be reliable with repayments.
FC Funding are commercial mortgage and funding specialists
With years of experience in all areas of commercial lending and facilities, combined with our knowledge of the financial sector, we can help you evaluate the various commercial mortgage options available, so that you can choose the most suitable product.