Understanding business mortgages
Liquidity is something that no business can afford to neglect. Without cash to hand, you’ll be unable to pay your staff, invest in the future, or deal with short-term shocks. There are myriad financing options available to those who run businesses, with mortgages being just one of them. Not only will they help a business to deal with cash-flow; they’ll also help to get the operation off the ground in the first place.
What is a business mortgage?
A business mortgage refers to any load secured on a property that you’re not living in. They’re distinct from residential mortgages in this respect, but for the most part they work in the same way. If you fail to make repayment, then you risk the lender taking possession of your premises.
How can I apply for one?
Once you’ve found a willing lender, you’ll need to submit an Asset and Liability form. This can be done using pen and paper, but most of the time it is done online. You can then apply for the mortgage, providing all the of the relevant information, before your property is valued and the offer is put forward by your lender. Over the course of this process, a number of checks will need to be performed by the lender’s legal team. You can expedite matters by providing trading figures, bank statements, and proof of ID as quickly as possible.
The pros and cons
The most obvious drawback of a business mortgage is that you will lose your property in the event of a default. Moreover, you might end up having to pay quite a significant deposit, and thus it’s worth making sure that you will be able to comfortably deal with the interest payments.
There’s also significant variety among the lenders available, which makes it especially important that you have a competent mortgage broker on your side. These professionals will run through the options and identify the lender that best suits your circumstances, and which offers the most competitive rate. Of course, they’ll extract a small fee for their services, but for the most part this is a price worth paying. If you’re unsure of your options, then consult one of the many financial advisers London has to offer.
Among the upsides is that you’ll be able to apply for a mortgage even if you don’t have the best credit rating, and that, since you’re going to be securing the loan against property, this is a straightforward way to expand your premises, or establish premises for an existing business.
