When you purchase or develop a commercial property in Hertfordshire, it can sometimes be more expensive than your working capital can handle. When this happens, you’ll need to raise commercial property finance to cover it.
Commercial Mortgages in Hertfordshire
Commercial mortgages are used by businesses and sole traders to finance the purchase of a property that will be used solely for business purposes (this includes property attached to a clinic that can be rented out). They are essentially the same as residential mortgages, the main difference being the intended purpose of the property – whether it be business or residential.
Although you may find it easier or even cheaper to rent a property, taking out a residential mortgage allows you to cover the rent whilst also affording you the opportunity for your business to own a valuable asset outright at the end of the payment schedule. An asset you may be able to sell on for a decent profit.
Although the terms and conditions will vary from business to business and lender to lender, you may be able to finance 100% of the purchase.
Auction Finance in Hertfordshire
When you purchase a property at an auction, payment is usually expected within 28 days. Luckily, there are commercial finance lenders in Hertfordshire who specialise in auction finance. You will be able to raise and pay the mortgage far quicker using auction finance.
However, the interest rates will be much higher. This is because the loan terms are far shorter, affording the lender less time to make profit on the interest payments. It is common for business owners who use auction finance to remortgage onto a commercial mortgage eventually.
Bridging Finance in Hertfordshire
Bridging finance covers short-term costs relating to building and development and is used when your working capital cannot meet the price. Usually, this type of property finance runs for 3-24 months with interest charged on a monthly basis.
Bridging finance is often used to cover the funding gap where a property has been purchased and the mortgage is not in place.
Development Finance in Hertfordshire
Development finance is the money borrowed to cover the development of land or property. This can cover building a new structure on land, or refurbishing and developing an existing property.
The value of the project is shown via the Gross Development Value (GDV), and this metric, minus the associated costs, will determine your profit at the end of the project.
It is essential that your financial and project forecasts are well thought out, taking into account the cost of the land, the cost of tools and equipment, transaction fees and much more.