A commercial property is defined as property where the occupants are a business rather than an individual, such as shops, warehouses and offices.
The property can be just a commercial premise or it may be of mixed use or semi-commercial by including a residential element on its legal title such as a residential dwelling above or adjacent to the commercial dwelling.
An individual or company may occupy the premises to run their own business and this would be called a Commercial Trading Property.
Alternatively, an individual or company may purchase the property to let to another business and this would be called a Commercial Investment Property. Similar to an AST on a BTL property, a contract will be entered into between the owner and occupier of the property to set out the terms of occupation. The minimum term is usually three years and will often be considerably longer.
What are the benefits of a commercial mortgage?
Commercial mortgages are being increasingly seen as a viable source of business funding and can do much more than simply giving you a place in which to operate. Owning your own premises means that you’re in a more secure position, as you are no longer exposed to increasing rental charges. Taking out a commercial mortgage can future-proof your business, by allowing you to access equity when property prices gradually increase.
Here are just a few benefits to taking out a commercial mortgage:
- You release capital which can be used for investment and growth
- You are free to consolidate business debts
- You have more money free to buy new equipment
- Your business can expand its trading
- It’s cheaper than renting
- You may also have the option to sublet parts of your property to bring in additional income
As a business owner, you can use a commercial mortgage to purchase a business property for a number of reasons – for your own use, to rent out, for purchasing a company, or unlocking equity within buildings you already own.