Getting a business mortgage

What is a business mortgage?

A business mortgage is like a mortgage for your home. Only now it is about financing business property. For example, an office, retail space, or business premises that you use for the most part yourself. The property you buy with the borrowed money is the collateral. This means the lender is allowed to sell the property if you do not pay back the loan. They run less risk this way.

A business mortgage almost always works with linear repayments. That means you pay off the same amount every month. You pay interest on the remainder of the loan. So, the amount of interest you pay changes during the loan term.

What to use a business mortgage for?

You use a business mortgage to purchase a new business property, refurbish an existing property or refinance an existing loan.

What does a business mortgage cost?

The interest rate of a business mortgage can be higher than that of a private mortgage. That depends on your business situation. The mortgage provider assesses whether you can afford the mortgage. For example, the financier looks at your knowledge and experience as an entrepreneur, how long your business exists, and your company's financial performance and financial reserves. The amount you want to borrow compared to the value of the property also affects the interest rate.

Are you going to take out a business mortgage? Compare the terms and costs of different providers before making your choice.

Duration and flexibility

The term of a business mortgage is usually 5, 10, or 20 years. The repayment schedule is usually calculated at 20 years. Suppose the mortgage has a 10-year uraction. Then there is still an amount outstanding at the end of the term. This amount is called a bullet payment or balloon payment. You can then refinance this amount.

Are you taking out a business mortgage for a renovation? Then you may have to repay this amount in a shorter period, for example 10 years. Ask your lender about this.

Applying for a business mortgage 

You can apply for a business mortgage with various banks. But there are also other providers. For instance through crowdfunding, other financial institutions, or through private loans from private investors. Are you going to apply for a business mortgage? Then you need to submit all kinds of information to the lender you choose. Each lender has its own steps for applying for a business mortgage. Check these in advance. You will often need the following documents:

• A business plan.
• An extract from the KVK.
• Financial data such as annual figures (preferably from the last three years), forecasts, and current bank statements.
• The Income Statement Entrepreneur (Inkomensverklaring Ondernemer) for the income test.
• Documents accompanying the property (e.g. valuation report, purchase contract, or purchase-to-build agreement).
• Proof of identity.

Tips

The business mortgage, you will not be the entire purchase amount of the business property. The maximum percentage that business mortgage providers finance varies from one provider to another. So, you will also need your own money, for example for the transfer tax (overdrachtsbelasting).

Are you going to buy a property? Then you should also take into account additional one-off costs. For example, for the appraisal of the property, transfer tax, and notary fees. There are also recurring annual costs such as property tax (onroerend zaak belasting, ozb), building insurance, and maintenance.

You can also combine forms of financing, a financing mix. One of the financiers then gets the right of first mortgage. This financier has the first right to receive repayment of the outstanding mortgage amount in case of voluntary or forced sale of the property. Financiers with the second and any further mortgage rights are then repaid in order.

Help with business financing

The Financing Guide helps you find your way in financing your business. Do you still have questions? Call the helpline on 088 585 11 11 or ask an expert.