Mortgage Advisor & Director
Head of Bridging and Commercial
Office space can be a sound investment, as practically all industries need some form of administrative functionality, but the use case won’t usually need updating for different industries.
If you’re looking to buy offices for your business, or to let out as a commercial landlord, read on to find out how office mortgages work and how we can help.
Can you get a mortgage to buy an office?
Yes you can, you’ll need a commercial mortgage, the type of which will differ based on what you intend to use the office space for.
If you’re looking to purchase office space for use by your own company, this could save your business a lot in commercial rental costs. You’ll need a commercial owner-occupier mortgage for this purpose.
If you’re a commercial landlord looking to purchase offices as a rental investment, you’ll need a commercial investment mortgage. However, the criteria lenders look at will be specific to the building and its intended use.
Multi-office properties
It’s possible to get a single mortgage for multi-office property, however, keep in mind that if there is any non-commercial element to a multiple unit facility, you may need to consider a semi-commercial mortgage.
As a rule of thumb, if 40-60% of the floorspace will be used for residential purposes, you will need a semi-commercial mortgage, rather than a fully commercial one.
How these mortgages work
Commercial mortgages are very bespoke products so lenders assess applications based on your individual circumstances and how you intend to use the property. It’s important to note that they are not regulated products, but this does allow lenders a bit more flexibility when it comes to assessing risk.
A commercial investment mortgage is usually considered more risky than a commercial owner-occupier mortgage for office space. Usually lenders will assess risk by looking at how you meet the following criteria:
Office mortgage criteria
- Deposit of at least 20% but the requirement can be 40% or more - lenders are likely to cap borrowing for investment use at around 70% LTV, whereas you may be able to borrow up to 80% LTV if you plan to occupy the space with your own business
- A robust business plan which shows experience in your own industry or as a landlord, should you plan to let out office space
- The property condition and value - although many lenders will be happy to consider renovations on older property given that office refurbishment is fairly straightforward
- The tenant (if you plan to let out the space). Lenders will look at the industry of prospective tenants, as well as the security their tenancy would provide. So, for example, well-established businesses and public sector usage will be considered lower risk
How to get an office mortgage
Whether you’re looking to buy office space or need an industrial mortgage, commercial borrowing can be complex. Brokers that specialise in commercial mortgages, like us, here at Teito, will be able to provide valuable advice on your application and business plan, as well as search the market for the most suitable commercial lenders for your needs and circumstances.
Book a free, no-obligation chat with broker who specialises in office mortgages below:
Find a better office mortgage deal on Teito
Lenders and rates available
There are a wide range of commercial lenders willing to look at office mortgages, as the space is so easily adaptable across industries, owing to greater resale potential. However, due to the bespoke nature of commercial finance, rates don’t tend to be published in the way that you might see residential mortgage rates.
Rates on office mortgages are generally higher than they are for residential mortgages, but it is recommended that you seek professional advice to find out what kind of rate you will qualify for.
There tend to be fewer high street lenders in the commercial market, but some large banks, such as HSBC, do provide lower risk commercial mortgages. To find the most suitable lender and rates for your office mortgage, it’s a good idea to speak to a commercial expert, like ourselves.
Other types of finance you could use
There are a number of other potential funding options that you could look at when funding an office purchase, for example:
- Bridging loans - which are a short term form of finance that can be arranged quickly. This is usually helpful for auction purchase.
- Development Finance - which is used for more ‘from scratch’ projects, such as building your own office space, or converting another property into offices. Funding is generally released in stages that match the build stages.
- Remortgage to buy property - If you already own property, whether that’s your own personal residential home or residential or commercial investment property, it’s possible to remortgage to fund a deposit, or in some cases, purchase another property outright.
Why choose Teito for your commercial mortgage?
At Teito we can help you through your commercial mortgage application from start to finish. Our advisers have experience in both commercial owner-occupier and investment purchase, so no matter what you intend to buy office space for, we can help you find the ideal lender.
Benefits of using Teito for your office mortgage are:
- Free initial consultation with no obligation
- 5-star service, as per Google, Truspilot and other leading review sites
- Access to over 90 lenders with potential for exclusive ‘broker-only’ deals
- Our brokers specialise in office mortgages
Ready to book in a free, no-obligation chat with a broker who specialises in office mortgages to explore your options? Get started here.
FAQs
If you are running your own office for a trading business, you may wish to consider group protection policies for your staff, such as key person insurance, as well as business insurance. Our brokers can recommend a range of different policy types for you.
Those who are planning to buy an office building to rent to paying tenants should speak to their broker about commercial landlord insurance and building insurance.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.