UK Business Mortgages
Small business mortgages are normally subject to a finite term of 20 years
As you may already be aware, a business mortgage is really a special type of commercial loan in which the lender has legal rights over the property until the termination, or repayment of the loan. Of course, for that reason alone you need to give a certain amount of consideration to the effect that taking out a small business mortgage will have on the finances of your company.
Most of the applications for loans of this sort are for small business mortgages which normally have a maximum repayment time of 20 years, and if you are seeking one such for your company then there are some guidelines below which may help your application.
The first thing a lender will be looking for is if you can demonstrate sufficient probability of repayment, and if not then you need not pursue the application further.
Good business and financial plans can be a great help of course, and you should be well prepared for an inspection of the property to be mortgaged in order to confirm it's market value.
You may be required to put down a deposit of anything from 5% to 30% depending on several factors which we are not allowed to enter into here as we cannot give that type of advice.
There are advantages and disadvantages to having a business mortgage, and one notable advantage is that you may well find the mortgage repayments to be less than rental payments, and of course, at the end of the loan period the property is yours, whereas you could rent for ever and a day without seeing any financial benefit from it.
The main disadvantage of your business mortgage is always mooted as being an increase in management responsibilities for the property, the cost of repairs and maintenance. However, You may well still have been held responsible for all that had you been renting if the agreement was that you were responsible for said repairs etc during the lease term.
Another disadvantage of a small business mortgage could be that it becomes much harder to relocate the central activities of your company than it would have been were you renting. That depends on your business of course and this point should be looked at keenly before you apply for the mortgage.
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