Buying commercial premises

As your business grows and commercial property prices fall, you may find that buying commercial premises is suddenly a viable option.

It’s true that lenders are withdrawing their products and frequently turning down applications, but commercial borrowing is still feasible, even in today’s climate.  Some institutions are willing to lend up to 75%, and full status lenders are helping businesses to buy premises such as:

• Pubs, clubs, bars and restaurants
• Shop premises
• Residential care homes
• Equestrian premises

 Non status lenders will provide finance to suit all circumstances, such as the need to self certify if you don't have up to date accounts.   

Choosing your interest rate and repayment schedule   

You should be able to choose between a variable or fixed interest rate. 

Variable interest rate - the interest charged on your loan will fluctuate in line with the Bank of England Base Rate or LIBOR (London Interbank Offered Rate). This means that your repayments may increase or decrease over the term.

Fixed interest rate - the interest charged is fixed from the start of your mortgage and generally lasts from 2 to 5 years, depending on the deal and lender.  With stable monthly repayments, you will be able to budget effectively.  At the end of the fixed term, your payments will probably revert to the variable rate.  

With most lenders, you can choose a repayment method that suits you.  But in all cases, the longer you delay repayment of the original capital sum, the more interest you’ll have to pay.