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Owner occupied Mortgages

What is an Owner Occupier Mortgage?

This is when the business than occupies/ tenants the property also owns the property.

Does your business operate out of a rented property? Maybe you feel you are wasting money paying rent to a landlord allowing you to operate from their property? By taking out an owner occupier mortgage either in your name or your businesses name you could purchase your own property to trade from, which can secure your businesses future whilst also giving you an asset which will hopefully appreciate in value.

So whether you are looking at buying the commercial property you currently trade from under a lease agreement, buying a new commercial property, or releasing some cash tied up in the property to expand your business further, we can use our network of lenders to obtain the best overall deal for you.

What can an Owner-Occupied mortgage be used for?

Many of our clients use this type of loan simply to purchase the property they trade from. However, Owner Occupier loans can also be used to raise money which then can be re-invested into a business, whether it be providing cash to fund a project, modernise a production line or provide cashflow for business expansion.

You may already have an Owner Occupier Loan

With rates starting as low as 2.25% over base rate it may well be a good idea for us to research the market for you to see if we can obtain better terms. We were recently asked by a Powder Coatings Company to review their loan and we were able to source a loan nearly 1.5% cheaper than their current deal which meant they then had the option of paying a reduced payment therefore saving them cash-flow every month, or keeping the loan repayments the same which meant they would repay the loan 5 years earlier saving thousands of pounds in interest costs.

What are the key Features of Owner Occupier Loans?

Up to 75% LTV available

Some lenders don’t charge arrangement fees

Interest rates from Base + 2.25%

Up to 25-year terms

Adverse credit cases can also be funded

What information do I need to provide?

The most important piece of information we need is the trading accounts for the business. Lenders will want to be comfortable that any loan taken out is “affordable” and therefore repayable from the business’s profits. Using our many years of knowledge in the commercial finance market we are able to analyse the business accounts and present the information to the lender in a format they understand, highlighting the strengths and mitigating any perceived weakness.

Owner Occupier Frequently Asked Questions 

How much can I borrow?

With Owner Occupier loans there are two main criteria to consider when assessing how much you can borrow:

The first is “serviceability”, which is calculated using the amount of profit your business makes compared to the cost of loan repayments. In other words, the lender has to be confident that the loan is affordable so in theory if we can demonstrate serviceability, there is no limit as to how much you can borrow.

Secondly, each lender will have a maximum percentage level they will lend against the value of the property known as Loan to Value (“LTV”). We have lenders on our panel who will lend up to 75% of the value of a property, however, in certain circumstances we have been able to secure funding at 100% of the property purchase price.

What rates should I expect to pay on a Business Mortgage?

The rates for Owner Occupier loans are bespoke taking into consideration factors such as Loan to value, term length of the loan and the overall perceived risk. The lower the risk, the lower the rate, and we have facilitated loans at as low as 2.25% over base rate.

What does “OPCO – Propco” mean?

This is where you have a separate entity owning the building to the one that operates the business from the property and pays the rent, with a common interest in both entities. For Example, Mr & Mrs Smith could buy the premises in their property Company (Propco) – Smith Properties Ltd and then rent the building to their trading company (Opco) Smith Trading Ltd.

The property could be a shop, office, industrial unit, or even a pub, restaurant, hotel or care home. The possibilities are vast. We use our knowledge and experience to facilitate the most suitable mortgage available via the full range of lenders, including High Street and specialist lenders. Positive Commercial Finance has access to the whole of market.

How long can the mortgage be for?

Owner Occupier loans can range from 6 months to 25 years

Are Owner Occupied Commercial Mortgage Payments Tax deductible?

The interest on a loan can in some circumstances be offset against your tax, however we would advise you to speak to your accountant or tax adviser.

How do Business Mortgages Work?

Business mortgages work in the same way as the mortgage on your own home. It is simply a loan secured against a property used for business purposes.

Can I repay the loan early?

Yes, many lenders will allow both monthly overpayments – this is a good way of reducing your overall loan term and therefore reducing the overall amount of interest paid and lump sum reductions – and lump sum reductions without penalties

How many years trading do I need for an owner-occupied commercial mortgage?

Most lenders will want to see at least 2 years trading accounts before granting a loan, however we have been able to source funding for start-up businesses by building a compelling case for lenders to demonstrate borrowers experience in the sector, and provided the business plan and financial projections are sound.

Owner Occupier rates and fees tend to be bespoke and are judged on a case by case basis, as lenders’ asses the  perceived risk against factors such as term, loan to value, loan size, business sector and profitability of the business so no one loan is the same as another therefore it is not possible to list them all here.

Other options within Mortgages

If you want a fast, flexible and reliable service, try
Positive Commercial Finance.


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