Finance options for commercial property 

Commercial property loans aid in financing the acquisition of business premises, supporting investment initiatives, fostering company growth, and facilitating business expansion. Various property loans and finance options, including commercial mortgages, bridge loans, and development finance, are at your disposal.


How a commercial property loan can help your business

If you’re considering investing in commercial properties or aiming to own your business premises, begin by comparing the market with Vanguard Insolvency.

A commercial property loan involves borrowing secured against any property not used as your primary residence. For some businesses, it’s the premises where operations occur; for others, the properties constitute the business itself, as seen in the cases of landlords or property developers.

No matter how your business uses property, there’s a finance option tailored for you. Some of the most popular loans include:

I. Commercial Mortgages – Commercial mortgages function similarly to traditional residential mortgages. A lump sum of cash is provided to purchase a property, and the mortgage provider holds a first charge over the property, even though ownership belongs to the mortgagor.

Opting to buy instead of rent a commercial property offers several advantages. As the property owner, you won’t face concerns about rising rent or a landlord deciding to sell, forcing you to find alternative premises. Additionally, you stand to gain from any increase in the property’s value, but conversely, you’ll bear the impact if prices decline.

To qualify for a commercial mortgage, a deposit of at least 30% of the purchase price is typically required. Expect higher interest rates compared to those offered for residential mortgages.

II. Bridge Loans – A bridge loan is a brief financial solution employed until an individual or company secures permanent financing or resolves an existing obligation. This form of financing enables the borrower to meet immediate obligations by providing swift cash flow. These loans are short-term, typically lasting up to one year, featuring relatively high interest rates and often secured by collateral such as real estate or inventory.

Referred to as interim financing, gap financing, or swing loans, bridge loans serve to ‘bridge the gap’ when funding is necessary but not yet accessible. Both corporations and individuals utilise bridge loans, and lenders can tailor these loans for various situations.

III. Property Development Finance – Opting for a conventional mortgage may not always be a viable method for financing a property, especially in the context of a new building development or an ambitious refurbishment project. A standard mortgage typically allows borrowing only a percentage of the property’s current value, rather than its potential future value. In contrast, a property development loan evaluates the completed value of the project and provides funding based on this assessment. Upon completion and sale of the development, the development loan can be repaid.

IV. Portfolio Finance – Portfolio finance constitutes a funding package covering multiple properties owned by the same individual or company. The borrowing is secured against more than one property, aiming to optimise the portfolio’s performance.

Eligibility for this finance relies on the annual rental income, with a higher yield increasing the likelihood of acceptance.

Vanguard Insolvency is adept at assisting you in obtaining the necessary funding for your upcoming project. Our team of experts diligently explores the market to identify the most suitable funding source for you and your business. Contact us today for a free consultation.

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Senior Partner at Vanguard Insolvency Practitioners | Website | + posts

I am an insolvency professional with a distinguished career specialising in commercial insolvency, adeptly navigating Creditors Voluntary Liquidation, Company Voluntary Arrangements, and Company Administrations. With a comprehensive understanding of insolvency laws and an unwavering commitment to ethical practices.