3.
A
mortgage is a form of loan, which is taken out against property (real estate).
The definition of property may include a house, a flat, or an apartment,
although mortgages cannot be taken out against any other assets such as a
vehicle, stocks and shares, or other investments. A mortgage can also be taken
out against an office, a shop or a factory (this is known as a commercial
mortgage), or against a property which the owner intends to rent out to other
tenants (buy-to-let mortgage).
Some
companies may own the freehold of real estate premises in the form of
factories, office accommodation or warehouses. These assets will have a value
in the company’s accounts. If the business wants to raise a capital sum for
investment in new assets, it could take out a commercial mortgage with a
property company. Normally the maximum mortgage will be between 60% and 70% of
the property value.
The
premises themselves are used as security, and the mortgage loan will usually be
for the long term.
The
advantage of this arrangement is that the business can continue to use the
premises as before, but must service the commercial mortgage in terms of
interest payments and eventually repaying the capital sum. Another advantage is
that any increase in property values over time still belongs to the business
and not the property company to which it has been mortgaged.
Great insights! When exploring financial options, considering a commercial mortgage loans can be a smart move to tap into your property's value for better financial flexibility. Thanks for sharing!
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ReplyDeleteThanks for sharing this valuable content – looking forward to more updates!
ReplyDeleteCommercial Mortgage Loans