It’s rare we cover commercial mortgages. Standard residential mortgages, first time buyer mortgages and buy to let mortgages generally hog the limelight. However, there are some pretty solid reasons to get a commercial mortgage.
As a commercial mortgage broker in Guildford, it’s worth us going into them. But before we do, let’s clarify exactly what a commercial mortgage is.
What is a commercial mortgage?
Commercial mortgages are simply mortgages (generally loans over £25,000) that are secured against a commercial property and repaid in instalments, just as you would with a residential mortgage.
There are numerous types of commercial property. The most common are:
1. Offices
2. Retail buildings (i.e., shops)
3. Industrial units
4. Hotels
5. Restaurants
A commercial mortgage can only be used to purchase or refinance commercial premises.
Buy to let mortgage vs commercial mortgage
Now, you might be thinking why would I invest in commercial property when I can invest in residential property?
Firstly, the buy to let market is much bigger and more competitive than the commercial market. So, if you were looking to spread your risk and could afford to, then investing in both markets might be a good option. The thing is, both are very different. And this takes us onto our four reasons to get a commercial mortgage.
1. Higher yields
This one is pretty straightforward. Commercial property yields are typically higher than those generated from buy to let property. According to Shepherd Commercial, commercial property yields in 2025 are averaging 8.7%, compared with an average buy to let yield of 6.93%, as reported in Money Week. And, as it’s not a buy to let mortgage, every monthly mortgage repayment is tax deductible.
2. Capital appreciation
As is historically the case with UK property, values tend to go up – not down. So, not only will you benefit from an average rental yield that is better than an average buy to let yield, but over a long-term period, you’re likely to build equity, too.
3. Tax advantages *
The tax advantages of commercial mortgages are hugely compelling. Let’s say you’re a business that actually needs an office as opposed to being an investor. So, you buy an office with a commercial mortgage. Unlike buy to let mortgages, which are not 100% tax deductible anymore, the cost of a commercial mortgage is tax deductible, which means you can use a commercial mortgage to reduce your taxable profit.
4. In control
Staying with the owner-occupied theme, if you’re renting an office then you’re at the behest of the landlord. Should they decide to up the rent, then there isn’t much you can do about it. By buying an office with a commercial mortgage, you’re in control when it comes to how much you pay to be there as opposed to being reliant on someone else’s decision.
As outlined, commercial property can be a good investment, regardless of whether you intend to use it or not. Of course, there are pros and cons of commercial mortgages. However, as a commercial mortgage brokerage in Guildford, we’re well-placed to walk you through what those are and provide access to some of the best commercial mortgage deals in the UK.
Why not get in touch to discuss your options.
For award-winning commercial mortgage advice, contact Complete Mortgages’ team of commercial mortgage advisers in Guildford on 01483 238280 or e-mail info@complete-mortgages.co.uk.
Complete Mortgages works with a number of specialist “packagers” (brokers for brokers) when handling commercial mortgage enquiries.
* please note that Complete Mortgages is unable to offer advice on an individual’s personal or company taxation situation and the impact this will have on their property portfolio and income. Always seek further advice from a tax specialist before proceeding.
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