Commercial mortgages advantages and disadvantages – it is always a prudent investment to buy commercial premises and to have your own property which could prove to be a very big business asset. However, you should have in mind that there are also some significant disadvantages to this kind of arrangement so it is important to have the necessary information before making your decision.
Why Commercial Mortgages? – Property Commercial mortgages can be used to purchase your business premises and the repayments structured with interests’ rates that are either fixed or variable. Commercial mortgages can also do more than purchasing a new home for your business. Some of the benefits include: development of existing property, extending current premises, development of new property, buying land, commercial developments and projects and residential projects and development.
Commercial Mortgages advantages – Sherwood Mortgage Group (for mortgage brokers Toronto there are numerous benefits of owning a commercial property and they include:
Low Interest Rates – different from other unsecured borrowing, commercial Sherwood Mortgage have typically lower interest rates. If you opt for fixed monthly repayments, you will be able to use them in your businesses forecasting and planning which will make you have a bit of certainty when structuring your business financing.
Capital gains – you can make some substantial capital gains when you purchase a commercial property. This is always a good way for property owners to realise capital gain over a long period as prices of property always rise.
Renting potential – you can monetize any additional space you have in or on the property by renting it out so that you can have some way of generating additional income.
Financial planning – Commercial mortgages payment plans often stretch for a number of years and this basically provides an opportunity for businesses to focus on other important matters of the business such as sales.
Commercial Mortgages disadvantages –disadvantages of these mortgages include:
Rising the deposit – you could need a substantial deposit for such mortgages. Not only will it be difficult to raise this cash, but this may be cash that you can use in developing other areas of your business.
Maintenance of property – you will be required to pay and undertake all of your premises security and the general upkeep.
Falling prices of property – property prices usually fluctuate sometimes and therefore the value for your property can be affected by this short term downturns. This in turn can lead to reduced capital which may eventually affect your finances and the ability to borrow in future.
Your Interest rate – your monthly repayments may become more expensive In the event that you have a variable mortgage. This is in case there is any rise in interest rates. You will therefore be subject to the base rate and the bank’s decision.