Mortgage Advisor & Director
Head of Bridging and Commercial
If you’re thinking of investing in warehouse property, either as a commercial investment or for use by your own business, take a look at our guide to getting a warehouse mortgage.
Can you get a mortgage to buy a warehouse?
Yes, you can, and there are two ways you might do so:
Owner-occupier mortgages
If your business needs warehouse space, then it can be much more affordable to use a commercial owner-occupier mortgage to purchase your own warehouse, rather than renting commercial property from another investor. This also adds to your business’ asset portfolio, and could increase your overall business equity.
Commercial investment mortgages
If you’re looking to invest in commercial property then you could purchase a warehouse facility using a commercial investment mortgage to become a commercial landlord.
Eligibility criteria
The type of commercial mortgage criteria you’ll need to meet will depend on the purpose of your purchase to some degree, however, largely lenders will look at:
- Loan amount and the loan-to-value (LTV) ratio of your borrowing - many commercial lenders will look at business assets as additional security
- Your business finances and trading history and those of any tenants if you’re planning to buy as a landlord
- Credit history
- The location, size, business class and overall suitability of the warehouse(s)
- Business plan - showing either how a warehouse would benefit your own business, or the projected rental yield if you plan to rent it out
How to get a mortgage on a warehouse
No matter why you plan to purchase a warehouse, it’s a good idea to speak to an experienced broker, like ourselves, to secure the most suitable type of warehouse mortgage for you. Any form of commercial lending can be complex, and you’ll need to present a strong business plan with your application.
At Teito we can help you to find the most suitable lender based on your business’ circumstances and the intended use of your warehouse purchase.
Get started with one of our expert commercial mortgage advisers below:
Find a better warehouse mortgage on Teito
Available lenders and interest rates
Commercial mortgage rates are tailored to your individual circumstances, and will vary depending on whether you’re investing in the warehouse as a business asset or to add to your commercial rental portfolio. Due to the increased risk, rates tend to be higher on commercial investment mortgages.
Lenders don’t tend to quote commercial mortgage rates due to the complexity and bespoke nature of the calculations behind them. One of our expert commercial mortgage brokers will be able to help you gauge a better idea of what you may be able to borrow.
Are warehouses a good investment?
As with any form of property investment, there are both potential benefits and risks. Here are some of the main points you might wish to weigh up before taking out a warehouse mortgage:
|
Benefits |
Risks |
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Buying a warehouse is typically cheaper than renting one in the long term |
There is a greater initial financial outlay when you buy a warehouse as you’ll need to pay a large deposit and mortgage related fees |
|
A warehouse could be a valuable business asset |
Property can depreciate in value and could also become a financial burden if your business or tenants become unable to make repayments |
|
Warehouses are popular commercial property with the continued evolution of drop shipping style online business, meaning they will be high demand for tenants |
Retail tenants are not always as secure as those in other industries due to the relatively high risk of this type of business |
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Warehouse construction means that they are easily adaptable to the needs of whichever type of business is in occupancy |
Alterations to ensure a warehouse fits your own or your tenants business use can add additional cost to your warehouse mortgage |
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In some cases it may be possible to convert a commercial warehouse to residential use, depending on the location and demand |
If rented for commercial purposes, warehouses are usually single-tenant property, which won’t bring in as much rental income as a multiple tenant property, such as an office block |
Alternative types of finance you could use
If a warehouse mortgages is not suitable, there are other forms of commercial finance you might consider to purchase a warehouse with:
Bridging loans
Commercial bridging loans are a form of financing that can be arranged more quickly, so are often helpful if you plan to buy a warehouse at an auction.
They usually have higher interest rates, but are repaid over shorter terms and are called bridging loans as they often ‘bridge’ the gap while you arrange a more permanent finance option, such as a commercial mortgage.
Remortgaging to release equity
Another option you might consider is remortgaging to release equity in order to buy a new property. Both your residential or other commercial property you own may be used as a deposit, or potentially to purchase a warehouse outright, depending on how much equity you have.
Development finance
If you’re planning to build a warehouse from scratch, or purchase one that needs significant redevelopment, you might consider development finance. This type of finance can also be used to purchase land on which to build a warehouse if needed.
Development finance funds are released in phases, usually in line with certain phases of the project. As you only pay interest on the elements that have been released, this can minimise costs during the build period.
Why choose Teito for your mortgage needs?
At Teito we’ll help you to choose the most appropriate funding options for your warehouse purchase. We specialise in all areas of commercial finance and have access to over 20,000 deals.
With Teito you’ll benefit from:
- Your first no-obligation consultation for FREE
- Sound impartial advice without the jargon
- A 5-star rated service - as determined by Google and Trustpilot users
- Mortgage brokers who specialise in warehouse purchases
Ready to take advantage of a free, no-obligation chat with a broker who specialises in commercial mortgages to find out what your options are? Get started here.
FAQs
Yes. This would potentially be another alternative to using a commercial mortgage to buy a warehouse. Asset finance can also be used to fund warehouse fit-outs, which involve kitting the space out with the infrastructure you will need to store stock or equipment in them.
You can read more about asset finance in our standalone guide.
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.