For how long do you take out a business mortgage?
The term of a business mortgage is at least 5 years, but more often 10 to 20 years. During that period, you must repay the mortgage with interest. If you want to take out a business mortgage for a renovation, the average term is approximately 10 years.
The term of a business mortgage partly depends on the depreciation periods in which you can write off the investment (in Dutch). Ask a mortgage or financial advisor for advice (in Dutch).
Annuity or linear mortgage
You pay monthly interest and repayments for your business mortgage. The most common mortgage types are annuity or linear mortgages.
- With an annuity mortgage, the monthly amount for repayment and interest remains the same during the term of the loan.
- With a linear mortgage, the monthly amount for the repayment remains the same, but the amount for the interest decreases. This also reduces your monthly costs.
Higher interest on a business mortgage
Business mortgage interest consists of interest and a risk surcharge, also known as debtor surcharge. That is extra interest that you pay on top of your mortgage interest. Mortgage lenders place you in a risk category. Your risk category depends on your specific business situation and is tailor-made. Due to this risk premium, the interest rate for a business mortgage can be higher than that for a private mortgage.
Level of the risk premium
The bank assesses whether you can pay the mortgage. They look at your knowledge and experience as an entrepreneur, the number of years your company has existed, and the financial buffer you have. Based on the assessment, the bank calculates how much risk premium you pay on top of the basic interest. A thriving and profitable company that has been around for a while, for example, pays less interest than a starting entrepreneur.
You also need private capital
Most banks finance a maximum of 70% of the market value of a commercial property. Market value is the value of the property for which it would be sold in a free market. So, with only a business mortgage, you cannot buy the commercial property. You also need your own money.
An example: for the purchase of a business property of €250,000, you must invest at least €75,000 yourself. You can also arrange financing for the mortgage on your commercial property in other ways. Such as crowdfunding, Qredits, and specialised financing platforms.
When buying a commercial property, you will have more expenses than only the purchase price. You will also have to deal with several one-off costs. Such as the costs for determining the value of the property (appraisal), transfer tax, and recording the purchase at the notary. The transfer tax for business premises is 8%. Also think of the annually recurring costs, for example, property tax (ozb), home insurance, and maintenance. Take these costs into account before you take out a business mortgage.
Points to consider when buying a commercial property
If you take out a mortgage for entrepreneurs for your commercial property, there are various schemes that are important for tax purposes. Points of attention are:
- purchasing business premises (in Dutch)
- including purchase costs (in Dutch)
- investment credit
- VAT-taxed purchase (in Dutch)
- reverse charge VAT
- obligation to keep records
- property transfer tax