Is It As Easy To Get A Commercial Mortgage As Getting One For A House?

The basic principles for obtaining a commercial mortgage are much the same as those that apply for a residential mortgage, with some slight variation. It does also depend on exactly what the mortgage is to be used for.

In all cases a deposit is required and often it will need to be larger than residential mortgage. Then the amount that the lender will offer will depend on the perceived value of the property and then the prospects for the business (rather than your salary). For a property that is going to be rented out to tenants, the potential rental income will be taken into account. These are normally referred to as 'buy-to-let' mortgages for residential properties and 'commercial investment' for properties that will be rented out to other businesses, such as offices, shops, warehouses and factories.

Development finance is a term used for a mortgage which is raised on a property that is bought in order to develop it and sell it on, hopefully at a profit. In this case the lender will take into account the cost of the land, demolition (if any) and labour and materials required for the development. They will also look at the expected final sale price and profit, before going ahead with the deal. These mortgages are normal interest-only deals, where your monthly payments are offset against the interest only and no portion is set against the capital amount lent. As the term is very short, usually a year, this does not make a great deal of difference.