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Owning a business is difficult, especially if you want to expand but lack the necessary funds. Commercial mortgages are one of the best ways to get the funds your company needs to grow. They can be used to acquire business space, develop the property, expand existing space, or make commercial investments. 

Read on to learn more about using commercial mortgages as a business expansion tool.

Understanding Commercial Mortgages

Commercial mortgages are typically repaid up to a thirty-year period, depending on the loan amount and other loan terms. Short repayment terms are also available from some lenders, but these are typically fixed-rate loans. They have several advantages over rental properties, which we will go over in more detail later in this article. 

One significant advantage of commercial mortgages is that you can keep ownership of the property you purchase. Unlike other types of investments, which require you to give up ownership or share it with others, this type of financing allows you to keep complete control. 

These loans allow for capital gain by actively contributing to capital growth, which is extremely advantageous for any business. They also provide significant stability for the business, making future planning easier. 

Furthermore, most commercial mortgages have lower interest rates than other commercial loans, resulting in lower monthly payments. This simplifies and improves financial management significantly, laying the groundwork for future success. 

Another advantage is that commercial mortgage interest payments are tax deductible. This means you can plan for profitability with commercial mortgages rather than dealing with issues like a cash shortage. 

Why You Need Commercial Finance

Commercial financing can help you seize opportunities as they arise. With a commercial loan from Wealthy You, you can be confident that a lack of funds will not prevent your company from expanding. 

What Can Wealthy You Commercial Finance Do For You? 

1. For Buying Real Estate

Investing in commercial real estate can be appealing, especially if a city, suburb, or town is in need of development. Long-term commercial leases can help you maintain financial stability. 

2. For Owner-Occupied Properties 

If you own a business, commercial finance can help you grow and capitalize on important opportunities. 

3. For Refinancing

A financial health check may be beneficial for home mortgages, business loans, and commercial finance. Refinancing may allow you to obtain a better commercial loan with better terms and rates. This can save you thousands of dollars over the life of the loan. 

The Operation of Commercial Financing

As with any mortgage, there are benefits and drawbacks. You must find a deal that is a perfect fit for you and the needs of your business. When it comes to commercial finance, this is critical, as each company faces unique challenges and opportunities. Understanding how commercial financing works, and its benefits and drawbacks may help you reduce risk and identify a product that will benefit and grow your business.

The Advantages 

1. Capital Boost

Having your own commercial space gives your company a capital asset. This will be useful in future finance applications. 

2. Equity

Owners of commercial, industrial, or residential property may benefit from accumulating equity. It may come in handy when applying for commercial and business loans in the future. 

3. Lease extensions

Borrowing money for commercial investment and then finding a tenant can be extremely beneficial. Long-term commercial leases can help you plan for future capital expenditures. 

The Disadvantages 

1. Cost

Commercial real estate can be more expensive to purchase than residential real estate. 

2. Vacancy 

Remember that business locations can have prolonged vacancy rates. Keep this in mind when investing in commercial real estate. 

3. Tax

The purchase of commercial property is subject to GST, and the sale is subject to CGT. 

4. Risk

By default, a commercial loan will also appear on the business's credit report. 

Conclusion 

As you’ve read and learned more about commercial mortgages, you can assess if their numerous advantages may benefit your company. Again, commercial mortgages can help your business grow and evolve by increasing cash flow, providing tax deductions, and offering competitive interest rates. If you’re still stuck on finalizing a decision, you can contact a professional to assess your options.

If you want to learn more about alternative mortgage lending sources, Wealthy You can offer various mortgage solutions that fit your needs. Discover more and reach out to us today for an obligation-free meeting!

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