How To Get The Best Mortgage

Getting a mortgage is a very important decision, so you have to make sure that you get the best mortgage for your needs. Despite this, many people simply opt for the first deal that looks attractive without really shopping around. If you really want to find the best mortgage for your needs, then you need to carry out a number of checks at each juncture before you sign for the mortgage.


Check your credit


Before you apply for any type of loan, you should get hold of your credit report and make sure that all the information is accurate. It is your responsibility to make sure that the report is accurate. If the report has mistakes in it, then you could end up paying a lot more for your mortgage.


Know the jargon


Another step you should take before applying for a mortgage is to learn the terms involved in mortgage lending. Learn about the types of mortgage as well as any abbreviations that are commonly used. The more you know, then the less likely you are to sign something that will cost you extra money.


Know your limits


The last step to take before applying for a mortgage is to know exactly how much you can afford to pay back each month, and how much you are looking to borrow. That way you won’t overstretch yourself and will get the amount of money you need to buy your ideal property.


Shop around


After you have done some research and got your credit checked, you should begin shopping around for a mortgage. The more lenders you look at both on and offline, the more likely you are to find the best deal. 


Determine all the costs


Although a low interest rate is important, there are usually other costs involved in getting a mortgage that you might not know about. Make sure that you know exactly how much it will cost you complete the mortgage application, and any other fees that might apply such as late or early payment fees.


Don’t be pushed into something


One of the most important things to remember is not to be pressured into signing anything you are uncomfortable with. Any lender that tries to get you to borrow more than you can afford or is pushy about you signing should be avoided. If you are in any doubts at all, do not sign the agreement and look elsewhere. If you need help understanding clauses then get a lawyer to look over the contract and explain the terms. Also, make sure you do not agree to anything that you don’t need, such as costly credit insurance. 


Check and double-check


Once you have found a lender that you are happy with, make sure that you check the contract thoroughly again, and read all of it through a few times, especially the small print. This is especially true if something was previously agreed and then you have met on another occasion to sign the deal. If anything changes then walk away and don’t sign. If you are careful and know what you are looking for, then you will find the best mortgage for your needs.

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How To Use A Flexible Mortgage

In today’s ever-changing world, people need more and more flexibility when it comes to borrowing and mortgages. With this in mind, more and more lenders are offering what they term as ‘flexible’ mortgages. However, the term ‘flexible’ can mean a lot of different things. If you are unsure about which mortgages are flexible and what the benefits of a flexible mortgage are, then this article might be helpful to you.
What does flexible mean?
Although there are a lot of mortgages that claim to be flexible, there are some things that define a truly flexible mortgage. There are four main characteristics you should look for when determining if a mortgage is flexible. These are:
· Being allowed to overpay
· Being allowed to underpay
· Being able to take payment holidays
· Interest is calculated daily
Overpayments
One of the best features of flexible mortgages is the ability to overpay. With traditional fixed repayment mortgages, there is no easy way for you to pay more than your fixed repayment each month. If you have a flexible mortgage, then you will have the ability to pay as much as you can each month. This means that during the good months you can speed up the process of paying your mortgage back. If you regularly overpay then you can save yourself thousands of pounds in interest payments.
Underpayments
Underpayments are another useful feature of flexible mortgages, but they should be used sparingly. If you are unable to make the repayment in a given month, then you can just pay as much as you can, effectively underpaying on your mortgage. Although this is good as it stops you from defaulting, there are penalties involved. The more you underpay, the longer the mortgage will last or the higher your repayments afterwards will be.
Payment holidays
Payment holidays are similar to underpayments, but they let you completely halt payment for a period of time. Although this might sound appealing, there are usually restrictions. Lenders will not let you take a payment holiday unless you have overpaid in the past, and after your holiday you will have to overpay again to get the repayments back on schedule. However, payment holidays are useful for people who are self employed or who want to take a break from work for personal reasons.
Other benefits
Another benefit of flexible mortgages is the ability to borrow back money from your mortgage. If you have overpaid in the past but are now in need of extra cash to fund home improvements or some other purchase, then you can borrow the money back that you have overpaid. Although you will be changing your mortgage terms again, getting a loan at the rate of your mortgage is the lowest personal loan rate you can possibly get.
If having flexibility and the chance to overpay and underpay is important to you, then you should definitely opt for a flexible mortgage.

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Do You Know How To Find The Best Mortgage Deal?

People will spend months or even years planning to buy their own home. They will work hard to build good credit. They will save a sizable down payment. They will search for the perfect house. Then they will settle for the first mortgage they see.

What is wrong with this picture?

It is important to remember that if you have good credit and a down payment then you are in the driver's seat when it comes to negotiating a mortgage. You are the dream customer that lenders want on their books. Even if your credit is not perfect and your down payment is nonexistent you are still an attractive client for many lenders.

Repeat this mantra whenever a lender acts as if they are doing you a favor by lending you money: I am going to give them a lot of money. Yes, you are. Over the next five to 30 years you are going to pay a lot of interest to this lender as well as repay the principal they originally put up. They are not giving you anything. This is a business deal and the lender stands to make a lot of money so you need to protect yourself to get the best deal you can.

While most lenders tend to make you think you should be grateful to them for taking this huge risk on you, it really is the other way around. A mortgage lender can't lose. If you honor the deal they will make a lot of money and if you don't honor the deal then they simply take your house back and keep the interest you paid in the meantime!

However there is an even bigger fallacy that lenders like to perpetuate. They don't want you to know how desperate they are for your business.  Look around and you will realize the truth of this. Check out the television, radio, and print ads that abound and you will see the mortgage lenders are getting pretty competitive.

That is why you simply must shop around to find the best mortgage deal available for you. In the end you could save yourself thousands of dollars. Here are five ways to help you find the best deal:

   ~ Shop around - Get quotes from various lenders. Look at local and national lenders and don't overlook the internet.
   ~ Compare terms - Interest rates vary from lender to lender but lenders offer different interest rates depending on the terms of the mortgage. How long will it be (15, 20 or 30 years)? Will it be variable or fixed?
   ~ Tweak some of the optional items that you control, such as the type of insurance you will carry and whether or not you will use escrow for taxes etc.
   ~ Adjust your down payment - Sometimes being able to increase the percentage of what you are putting down can make a difference in the lenders terms (similarly buying a less expensive house will work the same)
   ~ Haggle - Yes! Lenders often act as if their rates are written in stone but this is not the case. This is where shopping around can really come in handy. If you can show that you've got a slightly better deal with another lender then sometimes another lender will lower their rate to beat the competitor. Hey it's worth a try!

Just remember that you are in control of your future. You can choose whether or not to accept a mortgage lenders terms. There are a lot of lenders out there so you do not need to sign with the first offer you receive.

One last hint: It might be best to go through this process before you've found the home of your dreams! You can get preapproved for a mortgage with most lenders and that removes the pressure and worry of losing the home of your dreams while you negotiate with a lender. It also puts you in the driver's seat when you are negotiating to buy that dream home when you finally find it if you already have a mortgage ready to go.

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Avoiding Mortgage Mistakes That Can Cost You Money

If you are planning to get a mortgage, then you should make sure that you avoid a number of common mistakes that will leave you paying too much money or getting into financial difficulties. If you are aware of potential mistakes you can make then you will be better equipped to get the best deal for your needs. Here are the most common mortgage mistakes and how to avoid them:

Not sorting out your finances

If you try and get a mortgage before you have sorted your finances out, you could find yourself getting a rough deal or even being rejected for a mortgage. If you are rejected for a mortgage it can harm your chances of getting one from elsewhere. Before looking at mortgages, get all of your finances in order and have all your paperwork ready to submit to mortgage lenders. Also, get hold of your credit report and make sure that all the information on it is correct. If there are mistakes on your credit report it could harm your chances of getting a good mortgage.

Looking for a house without pre-approval

Many people make the mistake of looking at property without having any idea whether they can secure a mortgage to pay for it. The most common mistake people mistake is confusing ‘pre-qualified’ with ‘pre-approved’. Pre-qualification is a very initial estimation of how much you can borrow, and there is no guarantees you will get this amount at the rate you want. Pre-approval means that you go through the credit checking process and the lender agrees in writing to give you a certain amount of money. Getting pre-approval gives you a budget and makes you much more attractive to sellers because you have the finance already in place.

Borrowing too much

Perhaps the biggest mistake people make is to borrow too much money. This can come about through a combination of not being honest with yourself and pressure from lenders. If you are not honest with yourself about how much you can afford then you will end up in financial difficulty. You shouldn’t be tempted by lenders who offer you overly generous mortgages because it is you who will pay the price if you cannot keep up with the repayments. Work out how much you can comfortably afford to pay each month and stick to this budget.

Not shopping around

It is quite easy to get hold of a mortgage, but if you want a good deal you have to shop around. If you find a good deal, you shouldn’t automatically think it is the best deal you can get. Many companies offer amazing deals that turn out to be a lot more expensive than initially advertised. Do your research and find out what someone with your credit rating should be paying on average for a mortgage. If you do this then you will end up with a much better price.

Paying for things you don’t need

With a lot of mortgages you will be offered extra items and pay extra fees that are simply unnecessary. Although they might seem a small amount here and there, they can soon add up and you could end up paying a lot more than you need to. Make sure that your mortgage agreement only includes the items that you need, and query the price of any fees you think are too expensive. If a company tries to charge you too much then walk away. Remember, there are always other providers for you. If you are careful and avoid common mortgage mistakes then you will get a great deal and remain financially stable.

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Flexible Mortgage Guide

In today’s ever-changing world, people need more and more flexibility when it comes to borrowing and mortgages. With this in mind, more and more lenders are offering what they term as ‘flexible’ mortgages. However, the term ‘flexible’ can mean a lot of different things. If you are unsure about which mortgages are flexible and what the benefits of a flexible mortgage are, then this article might be helpful to you.

What does flexible mean?

Although there are a lot of mortgages that claim to be flexible, there are some things that define a truly flexible mortgage. There are four main characteristics you should look for when determining if a mortgage is flexible. These are:

·    Being allowed to overpay
·    Being allowed to underpay
·    Being able to take payment holidays
·    Interest is calculated daily

Overpayments

One of the best features of flexible mortgages is the ability to overpay. With traditional fixed repayment mortgages, there is no easy way for you to pay more than your fixed repayment each month. If you have a flexible mortgage, then you will have the ability to pay as much as you can each month. This means that during the good months you can speed up the process of paying your mortgage back. If you regularly overpay then you can save yourself thousands of pounds in interest payments.

Underpayments

Underpayments are another useful feature of flexible mortgages, but they should be used sparingly. If you are unable to make the repayment in a given month, then you can just pay as much as you can, effectively underpaying on your mortgage. Although this is good as it stops you from defaulting, there are penalties involved. The more you underpay, the longer the mortgage will last or the higher your repayments afterwards will be.

Payment holidays

Payment holidays are similar to underpayments, but they let you completely halt payment for a period of time. Although this might sound appealing, there are usually restrictions. Lenders will not let you take a payment holiday unless you have overpaid in the past, and after your holiday you will have to overpay again to get the repayments back on schedule. However, payment holidays are useful for people who are self employed or who want to take a break from work for personal reasons.

Other benefits

Another benefit of flexible mortgages is the ability to borrow back money from your mortgage. If you have overpaid in the past but are now in need of extra cash to fund home improvements or some other purchase, then you can borrow the money back that you have overpaid. Although you will be changing your mortgage terms again, getting a loan at the rate of your mortgage is the lowest personal loan rate you can possibly get.

If having flexibility and the chance to overpay and underpay is important to you, then you should definitely opt for a flexible mortgage.

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Don't Be Afraid Of Getting A Mortgage Online.

No matter what your credit history is, or what your circumstances are, the Internet has made the home loan process much easier. This article will outline a five-point plan to assist you in your pursuit of financing online:

Step 1: Don't be afraid to go shopping.

Discussing personal mistakes in life can paralyze us with fear, namely, getting into the "bad credit" issues. But getting into this "stuff' is completely unnecessary in the preliminary phase of shopping for a loan, beyond the basic information provided in an online short-form.

In other words, you don't really have to talk about the nitty-gritty details, until after a loan offer has been presented to you. So don't fret about it at first.

Because we're on the subject, if you are a consumer with credit history issues, let me briefly take this opportunity to state the obvious:

1. You're no different than anyone else. We all live imperfect lives.

2. Credit problems do not make you a bad person, and are really just reference points.

3. There are loan products designed for you.

4. There are lending institutions that are interested in earning your business.

5. There is nothing wrong with you, or your credit, or your situation. You can find a loan.

First, get into the right frame of mind. Don't be afraid to ask questions, and don't be intimidated by your credit history. Be honest. Give truthful information. But don't feel shame or regret for your past or present personal circumstance. They make you who you are, and that earns you respect.

Step 2: What's the going rate?

Information is free, so why not be informed? Many resources are available on the Internet to get current interest rates, and it's easy to compare them.

So to start with, take a look at two pieces of information:

1. Current Interest Rate, 30-year fixed

2. 6-month trend graph

A little exercise: Do you see the current rate? What about the 6-month graph? Are rates going up, down, or staying about the same? Is the current rate higher than it was 6 months ago? Lower then 6 months ago?

Now don't feel the need to analyze this information too much. For now, just look at it, and perhaps, check it several times a week to stay informed. If you do this, you're already 10 steps ahead of the game!

You are now an informed shopper. When an offer is presented to you in the near future, you'll be able to ascertain how good an offer it actually is by knowing how it compares to the "going rate". (Hint: Don't forget to check terms and fees, also known as "points", and conditions relating to your loan offer. Often times you will see higher points or less favorable terms, in exchange for a lower rate.)

You will be able to assess if you think rates are declining or on the rise, which may help you to decide if the present is the right time to make a purchase.
Step 3: Obtain several offers.

When you buy a car, do you seek out the best deal? When you go grocery shopping, do you consider which store offers the best prices? Shopping for a mortgage should not be seen any differently, and the best way to do this is to obtain several preliminary loan offers online.

1. Preliminary loan offers are simple, painless, and easy to get.

2. They contain the terms, rates, and pertinent information you need to assess the lenders.

3. They will take all the guesswork out of where you stand.

Get three or four offers and compare them. How do they compare to each other, and to the going interest rates mentioned in Step 2?

Many companies conduct searches for thousands of lenders, a lot of them in your local area, and they provide you with four loan offers almost instantly. Take advantage of this! These are no obligation services, and for the most part, the online application forms are simple. They take only a few minutes to complete.

You don't need to get into your credit history at this point. Completing the simple form is all it takes. If you qualify, and a lender is located that wants to do business with you, then you'll go to the next step, which is to discuss this possible opportunity over the phone.

Step 4: Remember this.

1. Lenders should never ask you for personal or private information during this preliminary phase. Of course they'll need to know some basic information about you and your situation, but never give out information you feel uncomfortable disclosing (such as your social security number), and look for a "privacy policy" on their website.

2. Remember that these are "preliminary" loan offers, which means no immediate commitment on your part. You complete a simple, on-line short-form, and then you get several offers in return. The lenders that made the offers may wish to talk with you over the phone, but that's where the preliminary process ends. The ball is in your court to choose a product that meets your needs, or to keep shopping.

3. These services are offered for free and you should not be asked for any service charges any time.

Step 5: Understanding your Options

If you've followed this simple plan, you will discover that there are consumer loan products tailor made to meet everyone's needs. Remember to examine the terms and rates, obtain several loan offers, and then talk to the lenders over the phone. Find out who they are, and whether or not you'd like to do business with them. Throughout this process, stay informed by checking interest rates, and settle for nothing less than what is attainable.

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Remortgages - Worth The Switch?

It’s becoming more popular to remortgage your house these days – all this means is switching to a different mortgage and sometimes a different lender to take advantage of a better deal.

If your circumstances have changed since you first took out your mortgage, you may find you want to switch to a new mortgage that better suits you. Likewise, if you chose a mortgage with a special rate for the first few years, once it reverts you’re paying more than other mortgages. So it can save money to remortgage, but there are a few things to consider first:

Charges

Are there early repayment penalty charges attached to your current mortgage? In some cases it can still be worth changing – the difference in interest paid in the long run could more than cover the cost of any penalties incurred.

Fees

You will have to anticipate all the associated costs of taking out a new mortgage, including a valuation fee for a surveyor, solicitors fees and any charges for arranging your new mortgage. Some deals offer cash to help cover costs, or ‘fee-free’ deals; you should balance the total cost against what you would save in interest to see if it really is worth switching.

Features

Many people are choosing to switch to one of the new generation of mortgages – either a flexible one that allows them more control over their payments; a current account mortgage that effectively allows you to merge all debts, savings and your current account to gain the best interest rates and save money. Offset mortgages are similar, but accounts are still held separately. This means you can move money between different accounts, but you won’t have a terrifyingly large overdraft showing on your current account!

Equity Release

If the value of your home has risen since you took out your mortgage, you can remortgage to the higher amount, and thus release the equity as a cash sum. There will be limits on how much you can borrow, depending on your income and the value of the property. Another area of ‘equity release’ are the schemes for retired people to access cash or a regular income through the value of their home. This means, effectively, that they buy your home from you while granting you the right to live in it for the rest of your life, rent free. ‘Home reversion’, ‘roll-up’ schemes and ‘home income plans’ all fall into this category. Be aware that any scheme you sign up to should be a member of Safe Home Income Plans (SHIP

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30 Year vs. 15 Year Mortgages

Discussions of mortgages often focus on interest rates, but there is a much more basic decision to make. Should you go with a 30 year mortgage term or a 15 year mortgage term?

30 Year vs. 15 Year Mortgages

Any discussion of mortgages tends to turn on two points. How can you qualify for the most money with the lowest payment? How can you get the lowest interest rate for the mortgage? While these are two important issues, there is an addition one that people fail to consider, resulting in significant wasted money.

The term of a mortgage is extremely critical for a couple of reason. First, it sets the length of the obligation you are undertaking. Second, it defines the amount of interest you are going to pay over the life of the loan. These are huge issues when it comes to building equity.

The longer the loan, the more total interest you are going to pay. The trade off, of course, is you are going to have smaller monthly payments the farther you stretch out the obligation. While this may sound like a good goal when you first get the mortgage, it can backfire on you in the long run.

Most people focus on interest rates as a way to save money on mortgages. This is a valid approach, but playing with the length of the loan is a better way to save money. If you can cut the payments in half by going with a shorter loan, you can save huge amounts on the total interest repaid to a lender.

The decision on the term of the loan is relatively simple, but entirely dependent upon your personal situation. There is no absolutely correct choice. First, you need to determine if you can comfortably afford the higher payments that come with a shorter term loan. In general, a 15 year mortgage will have payments 20 to 25 percent higher than a 30 year loan. Of course, you will pay the loan off faster, to wit, be building equity in the home quicker.

The modern mortgage industry has a variety of different term length products. When applying for a loan, take the time to evaluate the different terms to see if you can find a loan that is perfect for your situation.

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Build Equity By Choosing The Right Mortgage

Homeownership is the key to building wealth for most people because it is an involuntary savings account. As you pay down your mortgage each month, the value of your interest in the home rises.

Build Equity By Choosing The Right Mortgage

Equity is a beautiful word as every homeowner knows. Once you get used to making your mortgage payments, you can rest assured that you are creating a nest egg every month. Throw in the appreciation on the property and your nest egg can grow large before you realize it. This savings account, better known as equity, can provide the means for putting your kids through college, dealing with emergencies and retiring.

Building equity is fairly simple. Just make your monthly mortgage payment. There are additional steps you can take to move the process along at a faster pace. These steps are all about the type of mortgage you obtain when you purchase your home.

When you purchase a property, particular for the first time, it can be a stressful event. Right or wrong, most people tend to take anything they can get in a mortgage loan so they can meet the closing of escrow. This is understandable, but can come back to haunt you financially. If you can step back from the chaos for a moment, you might consider the following options that will help build equity.

A 30 year mortgage is the default for most homebuyers. It is the first thing that comes to mind and most assume it is the safest option. A 15 year mortgage, however, is going to cut down on the total interest you pay on the loan as well as supercharge your equity growth. The 15 year loan is far better than a longer option, but only if you are absolutely sure you can meet the monthly payment requirements. If you have any doubts whatsoever, there is another option that you can consider.

Making prepayments on principal is a simple, proven way to build equity. The idea is to make an extra monthly payment when you have sufficient cash to do so. Effectively, you use your home as a savings account by doing this. The advantage over other investments is the equity growth should be tax free. Before taking this step, find out from your lender if there are any prepayment penalties. Regardless, making two of these payments each year will quickly build equity in your home.

If any of these ideas sound interesting, you can still take advantage of them even if you currently have a mortgage. Refinancing your mortgage gives you an opportunity to correct mistakes you made when you more focused on getting through escrow. Talk with a mortgage broker to find out your options.

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Will Your Bank Give You The Best Mortgage?

Many of us tend to form a relationship with our bank even in these times of big banks. This does not mean, however, you should look to your personal bank for a mortgage.

Will Your Bank Give You The Best Mortgage?

It is a common misconception for people to assume that their bank will give them the best mortgage. It is a natural thing to assume, especially since people have often been banking with the same institution for many years and they feel comfortable with them. However, the fact is that if you limit yourself to going directly to your bank and getting a mortgage from them without looking elsewhere you are most likely shooting yourself in the foot. You are restricting the possibility of other options that might be better for you and this is never a good thing.

There is no doubt that your own bank might give you the plan you want. There is a chance that they will give you a good offer that would be tough to beat by any considerable margin elsewhere. However, this is just a chance. You will only know if it’s anything more than a chance by actually looking elsewhere. Sure, the comfortable and trust factors weigh in, and these can be major factors since you want to trust the institution that is giving you such a large amount of money for such an important thing, but there are many other trustworthy lenders out there that may have a better offer for you. Keep in mind that your bank will probably sell your mortgage to another lender within the first year.

The first place to go is to other major banks and lending companies which you know of. By going to these first, you are going to major companies which are trustworthy. Most major banks offer fairly similar rates, but it is still worth it to check around. In fact, you would be crazy not to check around. You may get yourself a quarter or half a percentage point off, which might seem small but can actually turn out to saving you thousands of dollars in interest payments. These other banks might also have other incentives or better options that you will want to consider. If you own a business, they may even offer you a better deal in an attempt to pick up that business.

There are plenty of other lending companies you can check with, both major and minor, online and offline. It is to your benefit to check as many as possible and not settle with your own bank just because they are the first place you check. Getting a mortgage is a huge thing and it is important to get the right mortgage plan for you, and this will only be done properly if you evaluate your options.

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Adjustable Rate Mortgages vs. Fixed Rate Mortgages

Buying a home can be an exciting and stressful time for anyone. While you may be excited at the prospect of owning your own home, especially if it is your first home purchase, the idea of choosing between all of the many different types of mortgages may leave you feeling confused and apprehensive.

Two of the most common choices you’ll find in the mortgage market are adjustable rate mortgages and fixed rate mortgages. Fixed rate mortgages are the most traditional type of home mortgage, offering a fixed interest rate that does not change throughout the life of your loan. There are a number of important advantages associated with this type of mortgage. First, if you are budget conscious, this type of mortgage will give you the peace of mind in knowing that your monthly mortgage amount will not change. You can budget the remainder of your financial obligations without worrying about a changing mortgage payment to throw things off.

An adjustable rate mortgage works differently. With this type of mortgage you may be able to obtain a lower interest rate than would normally be available with a fixed rate mortgage; however, the interest rate is not fixed. This means that your monthly mortgage rate may change as interest rates change. With such a mortgage you may not be able to regularly plan your budget due to such fluctuations. While there is usually a cap that will keep the interest rate from fluctuating too much, even a little fluctuation can be too much for some homeowners. Of course, there is also the possibility that interest rates will drop and if that is the case, because your mortgage is adjustable, your monthly payments will drop right along with the interest rate.

When deciding whether a fixed rate or adjustable rate mortgage is your best choice, you need to give thought to several factors. Ask yourself whether it is more important to be able to plan your monthly budget without wondering whether your mortgage will fluctuate or whether you would prefer to receive a lower interest rate in the beginning of your mortgage.

Remember that if you decide you would like to obtain the advantages of both you do have other options available to you. For example, if you feel the interest rate offered to you on a fixed rate mortgage is too high but you want the security of not having to worry about a fluctuating interest rate you can always buy down your interest rate by purchasing points. This will mean more up front costs for your mortgage; however, it may be worth it to decrease the interest rate, especially if interest rates are currently high.

If you do elect to go with an adjustable rate mortgage make sure you understand exactly how high the rates may go as well as ensure you have enough ‘wiggle’ room in your monthly budget to cushion increases if they occur. This may help to keep you out of a tight spot and possibly losing your home due to rising interest rates.

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Using A Comercial Mortgage For Your Business

Many people who invest in property or who own a business overlook the advantages of buying commercial premises. Although it is often cheaper in the short-term to rent property for business, there are a number of benefits to buying. If you are interested in commercial property, then this guide will tell you the best way to go about getting a commercial property mortgage.

What are the advantages of a commercial mortgage?

There are many benefits to buying commercial property using a commercial mortgage. Firstly, the commercial mortgage payment is likely to be the same as the cost of renting the property, and you have the added financial bonus that you will eventually own the property. Also, if you rent a property then you are subject to rent increases which can harm your business.

Commercial mortgages stop you from having your rent payments drastically increased and so give you peace of mind and stability. Also, the interest payments on a commercial mortgage are tax deductible, which may help you to reduce your overall tax burden each year. If you have a large amount of commercial property then any unused areas could be sub-let to other companies, although this usually requires the permission of the lender.

What are the disadvantages?

As with any type of loan there are also disadvantages to getting a commercial mortgage. Firstly, you will need to pay a large deposit as down payment on the property, which you may not be able to afford or is allocated for more important business items. If you are a business that anticipates rapid growth or the need for a change in location fairly frequently, then getting a commercial mortgage may not be right for you. It is much harder to relocate if you have to sell your property first, and if your business relies on quick relocation you could lose out. However, perhaps the biggest problem with owning commercial property is the responsibility involved. Unlike rental property you are responsible for the upkeep and maintenance of the building, which may end up costing you a lot of money should something go wrong.

What are the costs?

Commercial mortgages have higher rates of interest to residential mortgages, because the properties are usually of a higher value and the risk is greater. Although business success can be predicted, there is no guarantee a business will do well, and so the lender has to charge higher rates to account for this. Apart from this, the repayment methods and loan terms and fairly similar to residential mortgages. Most banks and mortgage lenders can offer commercial mortgages, but as with any loan it pays to shop around to find the best prices.

Who should get a commercial mortgage?

If you have a business and believe that you will remain in a location for a long period of time, then getting a commercial mortgage could be right for you. Leisure businesses such as restaurants and pubs are a good candidate for commercial property mortgages, as expansion usually requires additional units rather than moving premises. Also, you have the benefit of owning the property and perhaps benefiting from an increase in property prices.

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