In the world of Commercial Mortgages there are essentially two ways to take out a mortgage on a commercial property, either as an Investment or as an Owner-Occupier.

An owner occupied mortgage is for when a business owner occupies the premises from which they operate their trading company.

Owning your own Premises or Paying Rent?

Which is the more viable option for a business owner? Owning your own premises or paying rent? The answer is obvious. Rent is dead money whereas mortgage payments eventually lead to owning a commercial property that will only increase in value in the long term.

In many cases mortgage payments have been lower than rental payments, however that may change as interest rates continue to rise in the short term. Most lenders will consider a mortgage of 75% of the value of the property on either an interest only or capital and interest repayment basis.

There are many reasons why we advise all business owners who are currently renting their property to consider buying their own premises with an owner occupied mortgage.

Commercial Property – Good Investment Option

A commercial property is an asset-backed investment and as such has the best prospect of protecting its real value in times of inflation and in many cases outperform inflation.

Once a commercial mortgage is paid down or paid off and there is enough equity in the commercial property a business owner can use the property as security for additional borrowing for expansion or acquisitions. Secured borrowings always carry lower interest rates than unsecured loans.

When the business owner retires the property can be retained and rented out to new tenants as an investment to provide an ongoing income in retirement.

There are some lenders that offer preferential terms for owner occupied mortgages in the UK.

For all these reasons we welcome the opportunity to discuss if an owner occupied mortgage could be right for you. Please call us today to see how we can help or submit an enquiry and we will contact you.  Our advice is given freely, in confidence and without obligation.

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