Purchasing a property is an exciting step forward for any business. Whether it’s acquiring a retail property or purchasing office space, understanding the financing choices available to you – and which one is your best option – is the ideal way to get it right the first time. Read on to find out more about the four different options for real estate financing you might be eligible for:
1. Conventional Mortgages
If the property you’re looking to buy is likely to be a straightforward purchase, then a conventional business loan or mortgage might be the right fit for you. For traditional mortgages, it’s usually required that you put down between 5-25% of the value of the property as a deposit to secure the loan in full. With lower interest rates and reduced risk, this classic option is the number one pick for many
2. Property Development Finance
With lower regulation and a faster turnaround, hard money loans offer a viable way to purchase properties and turn them around ready for resale. While more commonly used for single, residential properties, property development finance can also be commercial properties that are in need of renovation and that can then be sold for a profit. Instead of lender-based loans, this option comes typically from investor funds or individuals to pay for renovations, as well as the cost of the property itself.
3. Combination Loans
Combination loans are a way for businesses without a full deposit available to be still able to buy their property. Also known as piggyback loans, this form of finance is suited to businesses that require a higher mortgage to be able to afford ongoing costs. This essentially means two loans, in addition to the deposit required – and is only recommended in particular circumstances where other loans and options may not be applicable.
4. Bridging Finance
Often used for short-term financial requirements, bridging finance provides quick and easy access to the cash needed to purchase a property with a far shorter term than the average loan or mortgage. Typically paid back in 1-18 months, this finance is the ideal choice for businesses with high predicted revenue. Allowing them to pay off their property as quickly as possible.
If you’re considering purchasing property as a business, knowing which finance option is best for you can ensure you get the best deal. Most importantly, understanding your options means you don’t miss out on the purchase of that next property.