Commercial Mortgage for Trading Premises Purchase

Buying business premises can reduce long-term occupancy costs while giving companies greater control over their future. It can also help preserve cash flow when the right commercial mortgage is in place.

In this case study, Positive Commercial Finance arranged a Commercial Mortgage for Trading Premises, enabling a successful limited company to purchase the premises it had previously rented.

The Opportunity

Our client had traded from the same rented unit since the company was incorporated.

The location was ideal for the business, but the rent had become increasingly expensive. When the landlord offered the property for sale, the directors recognised an opportunity to secure the premises for the long term while reducing their ongoing costs.

The Challenge

The client wanted to:

• Purchase the property with a relatively small deposit.
• Keep as much working capital in the business as possible.
• Secure a competitive interest rate.
• Complete the purchase with minimal disruption to trading.

Although the business was profitable and the directors had strong credit profiles, the transaction itself became increasingly complex and took longer than expected to complete.

Our Solution

Because of the client’s strong financial position, we were able to approach a selection of leading High Street banks offering some of the most competitive commercial mortgage products available.

We prepared a comprehensive lending proposal, supported by detailed financial information, and invited suitable lenders to submit competitive terms.

After comparing the available options, the client selected the mortgage that offered the best balance of competitive pricing, a high loan-to-value ratio and long-term flexibility.

Deal Structure

• Loan Amount: £375,000
• Loan to Value (LTV): 70%
• Interest Rate: 3% above Bank Base Rate
• Arrangement Fee: 1.5%
• Term: 20 years

The Result

The commercial mortgage enabled the client to purchase the premises while keeping valuable cash within the business.

Compared with their previous rental costs, the new mortgage reduced occupancy costs by approximately £25,000 per year, creating significant long-term savings.

Although the purchase became protracted, we worked closely with the client, lender and solicitors throughout the transaction. As a result, the deal completed successfully with minimal disruption to the business.