Committing to a long term financial decision is an unquestionably daunting factor, after-all with no real indication of economic improvement and a banking sector continuing to restrain commercial lending; it would be right to wonder which move would be the best for your business.
As a leading form of finance, a commercial mortgage is often deemed the most viable practice of business lending however with many, well publicised complaints of hidden charges and hiked fees; it is only natural for the business owner to question whether a commercial mortgage is right for their business?
The immediate Benefits of Buying.
Ownership - An obvious statement but nonetheless the primary plus point of a commercial mortgage. By committing to monthly mortgage payments, the proverbial end will be in sight and your business will eventually own the property in question. Property ownership will provide a substantial value and in the event that you should chose to sell; your business will benefit from an ample capital gain.
Financial Stability - In the face of continuing economic uncertainty; a commercial mortgage could provide your business with much needed financial stability. Rental payments are unquestionably volatile and can face rapid changes in the face of interest rises whereas monthly mortgage payments will remain the same, allowing business expenses to be managed at a far greater rate.
Improved Business Cash Flow - With the assistance of a professional mortgage broker; your commercial mortgage borrowing will be carefully planned out to ensure ease in long term business management.
Low Interest Rates - With repayments made over a period of between twenty to thirty years; a commercial mortgage carries far lower interest rates; in effect decreasing the monthly business outgoings.
Tax Deductible - Many commercial mortgages come with tax deductible interest repayments which can contribute to the overall tax reduction of your business.
The Mortgage Types Available.
In contrast to the standard and highly volatile rental payments; a commercial mortgage can be made available at differentiating rates; making it somewhat of a bespoke package, designed to suit the needs of your business. The flexibility of varying packages can make the commercial mortgage a substantially desirable, business lending agreement:
Fixed Rate Mortgage ? Lenders will offer a mortgage in which repayments will be fixed at one standard, monthly payment; allowing a better chance to manage budgets and remain protected from the unsteady economy. The benefit of such a mortgage is that, interest payments will remain the same and the business owner will not have to contend with fluctuating payments.
Variable Rate Mortgage ? Lenders will offer a mortgage in which interest rates will be fixed for a period of time (the specific length of time will be agreed with the lender and the borrower) after which it will be reset monthly, according to specific markers. The risk of such a mortgage may often outweigh the reward, which is why business owners will be greatly encouraged to seek advice from a specialist broker.
Interest Only Mortgage ? Lenders will offer a mortgage in which, the borrower will be required to pay off the interest from the borrowed sum ensuring that, in the long run interest payments remain fairly?consistent?throughout the mortgage term. The interest only payments will remain for a short duration as the repayment on the remaining loan will need to commence.
Will My Business Be At Greater Risk With A Mortgage?
Offered at different rates and complete with immediate financial gains; a commercial mortgage stands out as the clear leader however, in the face of continuing scandals over ?hidden charges? and ?fee hikes? it is often understandable as to why an immediate fear remains.
Housing Rent Index, Showing the increase in the rent index in the third quater of 2012
Image Courtesy of INSEE and Official Statistics?
Despite the volatility of rental payments; in the face of continuing financial scandal a commercial mortgage can be viewed as something to fear. However in the hands of a specialist broker, a commercial mortgage will only be offered if your business is deemed viable,?meaning that all risks will be assessed.
With the assistance of business plans and previous financial records; a specialist broker will use either the loan to value ratio or the debt service coverage ratio to determine your business suitability for a commercial mortgage and only upon approval will a loan be made available.
Working with only the best interests of your business, a commercial mortgage broker will ensure only the right solution is sought, transparency remains at the forefront and no hidden fees or shock surprises will ensue.
The prime purpose of a commercial mortgage broker will be to assist the financial needs of your business, without the sales and commission lure that is so associated with the banker.
In the face of the seemingly ?easy option? of rental; a commercial mortgage is proven to provide the appropriate stability required to drive success in such a struggling economy. What?s more is that, in the long run your monthly mortgage payments could potentially establish a viable sum of equity; again further securing the financial longevity of your business. Any initial application and process difficulties aside, the commercial mortgage is a financial leader for a reason.
If you are wondering what financial route your business needs to take then discuss the options available for you and your business to ensure the right decision is made to secure your business stability and longevity for years to come.?
Source: http://www.charlestonfinancial.co.uk/will-a-commercial-mortgage-benefit-my-business-rent-v-buy/
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