First Steps to Being Your Own Boss - Business Mortgages

Have you ever dreamt of being your own boss? If so then a business mortgage can be a useful tool in starting your new business. Business mortgages, also known as commercial mortgages, are loans that can provide you with the funding needed to buy commercial property, land or an existing business and get your venture going.
What you need to know.

A business mortgage is different to the type of mortgage you would have on your own home. The main difference is that the lender retains a legal right over the building or land until you have repaid the loan in full. Because of this it is important that business plans are carefully drawn up to avoid missed mortgage payments or potential financial problems.

The Advantages
A business mortgage can be a flexible way of funding a new venture. If you are buying a property then your mortgage repayments will take the place of rental payments. This is also beneficial as your business is effectively accruing an asset instead of wasting money on rent. The property market itself may also add to your company’s assets as any increase in market value of your property will mean an increase in potential resale value. This is an obvious advantage over a potential increase in your monthly rent. Another advantage of owning your premises is the opportunity to make your property earn you the most income whilst you are not tied down by rental contracts. Subletting areas of your property, a practice normally banned under rental agreements, can bring in a substantial additional income. If you are buying premises that you will also be living in, such as a bed and breakfast establishment, it is also worth considering the additional saving you will make on your own living expenses.

The Disadvantages
As with all mortgages a business mortgage is a long term financial commitment repayable over a term of at least 15 years. Business mortgage rates may be slightly higher than domestic mortgages but this is often outweighed by the increase in flexibility of their terms. You should also consider that as a property owner you will be financially responsible for all the maintenance and upkeep of the building. Because of this it is important that a professional survey is instructed and you are fully aware of the condition of any premises you may be buying. The other main disadvantage of owning rather than renting is that relocation is a longer process. It is worth remembering this especially if your business expands rapidly.

The all important first step
Plan your business. It is worth making sure your business plan is water tight before approaching anyone for financial support. If you have trouble formulating a business plan it is worth looking on the internet as many sites give away free planning templates. Once you’ve got your plan the next step is to research and get to know what funding options are out there. There are many websites that give information on business mortgages and some that allow you to compare products side by side. This is a good way to judge the values of each type of mortgage and ensure that you get the best interest rate. If you are in doubt about how to proceed it may be worth consulting financial specialists who can advise you. Most banks and building societies also have a business advisor who can offer free mortgage advice but just be aware that their bias will be towards their banks own products.

Summary
Starting your own business is a stressful venture but the benefits are huge once you are up and running. It is worth giving you financial options very careful consideration. Searching for and comparing business mortgage options is a good place to start. Creating a sound business plan and through research of your funding options are the building blocks of a great financial future.
Brian Long is the author of numerous financial and Business Mortgage related topics. He is the founder of Speaking Commercial, specialists in Commercial mortgages and Commercial remortgages.

The views in this article represent those of the authors and not those of Speaking Commercial. This article does not represent financial advice and is purely editorial supplied by third party's. If there is information within this article which you wish to rely on then please check those details with relevant financial or other professionals prior to making any important decisions.