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Commercial mortgages are very much like residential ones in that you use property as collateral to either buy or refinance that property. It provides a flexible and affordable solution to provide a financial boost to your business, as well as the best way to finance the purchase of buildings and land for your business. The lender receives payment of the commercial mortgage plus interest over the life time of the loan. Like residential mortgages failure to repay you mortgage may result in the repossession of your company property as the lender has legal claim over the property until the loan has been repaid. If you do have mortgage arrears the lender can reposes the property and sell it in order to pay for the outstanding debt. Interests on commercial mortgages are often tax deductible while the net proceeds of the mortgage are not considered to be of taxable income. Always check with a financial expert before going ahead with the mortgage to check the tax implication, as incorrect payment of taxes can result in sever punishment. The most popular use of a commercial mortgage is to purchase property whether that is for an existing company who is expanding or a new start up business buying their first premises. Commercial mortgages can also be used for investment in commercial or residential projects, as a business mortgage can still be acquired against property or land. Usually there are two types of commercial mortgage available, fixed rate mortgage and variable rate mortgage. Fixed rate mortgages establish an interest rate that is in place for the life of the loan or a fixed period of time. Once this period of time has lapsed the mortgage will revert to the second type which is a variable mortgage. Variable interest rates mortgages have there rates based on those set by the Bank of England. As a result the interest rate you will repay is likely to go up and down throughout the life of the loan.
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This article was written on behalf of General Finance Centre who provide commercial mortgage.
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