Landlord potentially benefits also from cheaper interest rates on his mortgage because of lower and lower LTV. It doesn’t sound fair to charge you more but it is fair and it is acceptable to all parties. So now you have the answer why landlords keep their commercial properties for rent and hardly ever sell. It is good business and profit usually is greater than for standard residential buy to lets with the security of having a tenant for years who is looking after maintenance. Your landlord may think it is difficult to obtain a commercial mortgage as well so he prefers not to sell it just in case he will not be in possible to obtain the other one.
And now we have some good news. It is not that difficult to get a mortgage for commercial premises. So, if you think about buying the premises of your current landlord and buy new premises for your business or even invest in a commercial rent to buy. A mistake is that most people think that lenders’ assessment of company strength is so sophisticated. Of course, lenders check your company or your accounts if you self-employed but you might not do a profit and you are still fine. A commercial mortgage is like any other mortgage and it is secured against the property. So lenders have a security that if you default on your mortgage they can repossess the property. It is safe. So YES subject to deposit of 25-30% of purchase price and decent credit history you can get a commercial mortgage.
Commercial mortgages tend to be just a bit more expensive than residential ones. At the end of 2018, you are able to get a mortgage with an interest rate of around 4-10% a year. Typically it works out much cheaper than your rent which landlord tend to charge 8% annually of the property value.
So if you want to buy off your existing premises, buy a new one or invest be free to contact Financial Brokers Ltd. Free, no obligation initial consultation.