Commercial mortgages: activity across the market in 2021
Commercial mortgages, it’s an active market. Before jumping into the reasons why, let’s start with a short explanation on what commercial mortgages are for anyone unfamiliar with this form of funding. Also known as business mortgages, commercial mortgages allow business owners to raise funds and borrow money that is secured against a property. This form of mortgage is particularly relevant if your client is looking to buy-to-let property or an office, or to expand their business or investment property portfolio.
A shift in working practices, with people increasingly working from home, and an acceleration in the adoption of digitalisation are just a few of the reasons why this has been seen to be an active and dynamic market in recent years. With both these trends intensifying following the impact of the pandemic, many trading businesses are needing to reassess their borrowing needs so they can either repurpose premises, expand or simply rearrange their existing repayments so as to adjust their business financial plans.
Government-backed schemes like the Coronavirus Business Interruption Loan Scheme (CBILS) have provided a lifeline for some businesses. Looking beyond the initial 12-month support period of no repayments, it is likely that many business owners will look to refinance this borrowing into longer term facilities which may well be connected to their business property.
What other examples of activity are we likely to see in this area? Prompted by the shift to employees working from home, businesses with office buildings will likely want to repurpose their premises, requiring development finance to convert their office space into residential premises under the Permitted Development Rights for example. Connected to this, the residential property investor market remains buoyant in light of the tax and regulatory changes made in the last few years. This has resulted in the market being increasingly comprised of professional landlord investors operating as SME businesses and diversifying into differing asset classes of House in Multiple Occupation (HMO) and Holiday Let.
In short, we expect this to remain a busy area of funding in 2021. In recognition of this, we have recently extended Swoop’s product offering to include commercial mortgages, ensuring that we service the specific needs of both owner occupiers and investors of commercial property. So, if your client is looking to purchase or remortgage property or land for commercial use, simply sign-up to Swoop to check their eligibility and speak to our team of experts who will help your client secure their ideal commercial mortgage.