For businesses looking to expand, diversify, or invest in property, commercial investment mortgages offer an effective way to finance property acquisitions. These mortgages are specifically designed for purchasing commercial properties, such as offices, warehouses, retail spaces, or buy-to-let investments.
There are several reasons why a commercial investment mortgage can be a smart choice.
- Access to larger funds for growth
Commercial properties often require significant upfront capital, making it difficult for businesses to purchase them outright. Commercial investment mortgages provide access to larger amounts of funding, enabling businesses to invest in high-value properties without depleting their cash reserves. This ensures businesses can continue to allocate resources to important running costs, such as operations, staff, or marketing, while still being able to secure the most valuable asset a business can own.
- Generate long-term income
For businesses purchasing properties to lease, such as offices or retail spaces, a commercial investment mortgage can bring excellent long-term income. By renting out all or part of the property to tenants, businesses can generate a steady rental income to cover mortgage repayments and earn a profit. In many cases, property investments can become a significant revenue stream.
- Capital growth opportunity
Property investments have historically shown strong potential for capital appreciation, especially in high-demand locations. By securing a commercial property, businesses stand to benefit from rising property values over time. A commercial investment mortgage allows businesses to capitalise on excellent growth potential.
- Favourable interest rates and flexible terms
Commercial mortgages often offer more favourable interest rates compared to other forms of borrowing, particularly for established businesses with strong credit histories. Lenders offer flexible repayment terms, allowing businesses to spread payments over 10 to 25 years. This reduces the financial burden and makes property ownership more accessible.
- Tax benefits
There are potential tax advantages to owning commercial property. For example, businesses may be able to offset mortgage interest payments against rental income for tax purposes. Additionally, investing in commercial property can serve as a long-term tax-efficient strategy for businesses aiming to build their asset base.
- Diversification of business assets
Investing in commercial property provides businesses with an opportunity to diversify their assets. Instead of relying solely on revenue from core operations, owning commercial property creates an additional source of stability and security. This diversification reduces overall risk, especially during economic fluctuations.
- Opportunity to own rather than rent
Renting commercial premises can be a significant ongoing expense for businesses, often considered as wasted money. By purchasing property with a commercial investment mortgage, businesses can gain ownership of their premises. Over time, this eliminates rental payments and builds equity in the property, creating a valuable business asset.
- Support business expansion
For businesses looking to expand, securing a new property is often a critical step. Whether it’s opening a second location or increasing operational capacity, a commercial investment mortgage provides the financial means to grow. With the right property in place, businesses can better serve their customers and continue to achieve long-term objectives.
We have recently supported a property investment owner who has 35 units, a mix of residential and commercial assets. He was looking for equity to be released to allow for the re-financing of existing expensive debt to the value of £6million.
Whether investing in buy-to-let properties or acquiring new business premises, commercial investment mortgages are a strategic tool that supports both immediate and long-term goals. For businesses seeking to grow, this form of financing is well worth considering.
If you have any questions or need some help in regard to commercial investment mortgages or other aspects of business finance, please call us on 01993 706403 or e-mail enquiries@ngifinance.co.uk.
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