Buying a business premises

Find out more about our full Business Premises Guide here or browse through the content below to learn more.

A commercial mortgage is the most common form of finance for the purchase of a building. Before you begin the process of searching for a commercial mortgage provider, you should have relevant documentation and business numbers prepared. Your lender will likely want to see:

1. Audited accounts for the last two years
2. A profit and loss forecast/ growth projections for the next few years
3. Current business performance
4. The personal details of the key stakeholders in the business for credit-checking
5. Asset and liability statements for each applicant
6. A business plan detailing how the property will contribute to your cash flow and how you plan on repaying the loan
7. The credit status of the business
8. Details of any personal investments involved

Note: Different mortgage lenders may require different information so check with them to find out exactly what they need to see ahead of a mortgage application.   

In costing out mortgages, you should consider:

• Booking fee
  This is also known as an Application Fee, this is the charge to ‘book’ or ‘reserve’ your mortgage funds whilst your application goes through.
• Arrangement fees
  This is sometimes called a Completion Fee, it is the fee that your lender charges to set up your mortgage and is usually charged between 0.5% and 1.5% of the loan value.
• Valuation Fees & Valuation Administrators Fee
  Cost of the lender undertaking a basic survey on the property to establish value, this is also known as a Mortgage Valuation.
• Legal Fees
  Including legal documentation and surveys
• Redemption Penalties
  A fee payable to the lender if you pay off your mortgage before your agreed term

If you are considering buying, speak early on to your bank to see if they are prepared to lend you the money that you need. Typically banks will lend around 75% of the purchase price (subject to valuation) although this may vary depending on individual circumstances.