Occupying
your own business property, rather than merely
using a copy of the landlord''s keys, can be a
source of great satisfaction and can prove to
be very cost effective. In order to own your business
premises, it is likely that either a commercial
or semi commercial mortgage is required.
Businesses need to be on a relatively secure
financial footing before applying for a commercial
mortgage. Commercial borrowers are considered
to be a higher risk in terms of loan repayment
default than for example an employee with a
residential mortgage. The repayment terms as
a result are not as cheap as residential mortgages
and a sizeable deposit will be required. The
majority of commercial lenders are likely to
lend between 70 and 80 per cent of a property''s
value. In addition, interest rates will be higher
than those attached to residential loans - typically
between 2 per cent and 4 per cent above the
Bank of England base rate. Often this can be
negotiated in relation to the size of the arrangement
fee, dependant on the term of the mortgage.
Arrangement fees on some products are negotiated
on a case by case basis. Where charges are stipulated,
they tend to range between 0.25 per cent and
1.25 per cent. Most lenders set a minimum level
for the advance they are prepared to make, ranging
between £15,000 and £100,000. Some
also specify the maximum amount available to
borrowers.
Businesses can also take advantage of tax allowances,
by claiming back some of the costs of a commercial
mortgage.
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