Deciding on whether to purchase a commercial property is a huge decision.

The majority of us need to take out a commercial mortgage to help finance the purchase.  Buy why would we do that when it can be just as easy, if not easier, to rent?

Have a look at our thoughts on the pros and cons of taking out a commercial mortgage, as opposed to renting your business premises.

It goes without saying that the main advantage is that by paying a mortgage, you are steadily buying a valuable asset, whereas when you rent premises you know that you will never see the money again.

But there are many other factors that need to be considered, as a commercial mortgage just doesn’t suit some businesses and the way they operate.

Advantages

Commercial Mortgage Rent
–       You will own your own business premises; an asset that will potentially increase in value –       It’s easier to re-locate if needs be or if your business grows
–       A fixed rate mortgage offers security for a set period of time – allowing you to set budgets and manage cash flow. No rent increases here! –       A large deposit isn’t required, freeing cash flow for other, more pressing business issues.
–       Subject to the lenders agreement, your premises could earn income through sub-letting space. –       Your landlord is responsible for all maintenance.
–       The interest on repayments is tax-deductible –       You won’t be affected by any fluctuations in property prices
–       Mortgage repayments are likely to be cheaper than rental payment on the same property
–       Making changes to the property are quicker and easier as you don’t need permission from landlord

Disadvantages

Commercial Mortgage Rent
–       You are responsible for property maintenance and security –       Cash flow stability can become strained as your rent can be put up unexpectedly by the landlord.
–       If property values decrease, so does your business asset value –       The money being paid for rent is not accumulating to the ownership of the property
–       A large sum of money needed for deposit; usually between 20 – 30% –       There will be restrictions to any changes and adaptations you wish to make to the property
–       If you need to relocate completely, it is easier and quicker to exit a rental agreement than selling or leasing premises.

Purchasing a commercial property is a big commitment and if you decide to do so. Working on your behalf, we would, be able to search the whole of market on your behalf, keeping in mind your requirements and needs to ensure that you achieve the best possible deal.

Contact us today to discuss your options!

If you are interested in buying a commercial property but feel it may not be the best option for you, or you think that there is something that would affect your ability to obtain a commercial mortgage – please contact us for a no obligation discussion.  We thrive on complex cases!