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SMEs should look at alternatives to commercial mortgages

Dec 06 2007

SMEs should look outside the commercial property market when searching for ways of funding a business property purchase, says an industry expert.

Harry Katz, a principle financial advisor for Norwich Consultants, says business owners could look at remortgaging their own homes or purchasing property through a pensions fund as viable alternatives.

If these were not options then, 'generally speaking,' a bank could provide the best deal for a mortgage, he states.

He says: 'If you can't get a good deal from your bank, it means that you're not terribly credit-worthy, which means that you've then got to go to the commercial mortgage market – and get ripped off!'

Potential business profits, bank relations and the property price were all concerns that an SME owner would have to evaluate before taking steps forward, he adds.

Research from the Yorkshire Bank has revealed that 22 per cent of SME owners would like to pay off their mortgage early to aid growth in their business.

A further 19 per cent said they would take more business risks if they were free of their mortgage repayments.

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