Investing in commercial property is a positive move for business owners looking to secure long-term stability, build equity, and reduce rental costs. Instead of leasing, owning business premises through a commercial mortgage can offer significant financial and strategic advantages.
There are several reasons why:
- Build long-term equity
When purchasing a commercial property, every mortgage payment builds equity—an asset that grows in value over time. Instead of paying rent to a landlord, a company is investing in its own business’s future, creating long-term wealth.
- More cost-effective than renting
With rent prices often rising year on year, leasing can become an expensive and unpredictable cost. A commercial mortgage provides stability with fixed and predictable repayments, often making ownership cheaper than renting in the long run.
- Access to competitive interest rates
Many lenders offer competitive interest rates for commercial mortgages, especially if the business is financially stable. Fixed-rate options provide certainty, while variable-rate options can allow for flexibility and potential savings. There are benefits with both options.
- Tax benefits and relief
Owning a commercial property can offer some tax advantages, typical examples include:
- Mortgage interest deductions
- Depreciation benefits
- Business expense write-offs (in relation to repairs, maintenance, and improvements)
These savings can significantly reduce a business’s overall tax burden.
- Full control over working space
In owning a business premises, the company has full control over modifications, expansions, and branding without restrictions from a landlord. This flexibility provides the creation of a workspace that best fits the operational needs.
- Potential rental income
If a commercial property has extra and unused space, it can be leased out to generate additional revenue, creating an extra income stream which further helps with mortgage payments.
- Increased business stability
Owning commercial space means a business is no longer at risk of lease terminations, rent increases, or landlord-imposed restrictions. This stability ensures a company has a permanent home, securing its long-term growth.
Strengthening your balance sheet
By converting rent expenses into equity-building assets, a business can improve its long-term financial stability. Owning property instead of leasing can increase asset value and enhance net worth leading to a strong balance sheet.
At NGI Finance, we take pride in helping businesses secure the right commercial mortgages to support their growth and stability. From assisting a mariner in Rugby to purchase their unit and marina for £450K to facilitating a £6 million deal for student accommodation in Oxford, our expertise spans various industries. We’ve also helped a nursery in Andover transition from leasing to ownership with a £350K loan and enabled a firm of Oxfordshire accountants to acquire a satellite office with a £220K mortgage.
To conclude, using a commercial mortgage to invest in property is a strategic decision that offers financial security, cost savings, and business stability. If a business is well-established with strong financials, securing a mortgage could be the smartest move toward long-term success.
If you are looking for some help with regards to a commercial mortgage or any other form of business finance, please call us on 01993 706403 or e-mail enquiries@ngifinance.co.uk.
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