Getting a business mortgage

How does a business mortgage work?

A business mortgage is like a mortgage for your home. 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 therefore run less risk. 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.

Business mortgage providers

You can go to the various banks for a business mortgage. But there are also other providers. For example, through crowdfunding, other financial institutions, or loans from private investors.

You can also combine forms of financing. This is called a financing mix. One of the financiers then gets the right of first mortgage. This financier has the first right to your 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 of a ranking.

Duration of business mortgage

The term of a business mortgage is often 5, 10, or 20 years. The repayment schedule is usually calculated at 20 years. Suppose the mortgage has a 10-year term. Then there is still an amount outstanding at the end of the term. This sum that remains 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. Ask your lender about this.

Interest rate of a business mortgage

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

Investing your own money

A business mortgage usually does not get you the entire purchase amount of a business premises. The maximum percentage financed differs per provider. You will usually also need your own money, for example for the transfer tax (overdrachtsbelasting).

Things to keep in mind when buying business premises

Are you going to buy a property? Then you also need to take extra one-off costs into account. For example, the valuation of the property (taxatie), transfer tax, and notary fees. There are also recurring annual costs such as property tax (onroerende zaakbelasting, ozb), building insurance, and maintenance.

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.