Buying a house to operate a business from

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laragh

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Hi,

I'm looking for advice on a business idea.

I am thinking of buying a private house to run a creche from. I need to borrow about €250,000 to buy the house and make some modifications.

Is there such a thing as a business mortgage?
If yes, then what banks offer these?
How do they differ from private mortgages? Are the rates and terms different?

I intend shopping around but I just want some basic knowledge in this area first to leave me in a better position to assess what is on offer!
 
A business mortgage is known as a commercial mortgage and yes they are available. Generally the rates on them are usually higher but shop around. One thing to consider is that you will need to get planning permission to change the use of the house from domestic to commercial. When doing this you need to make sure that the neighbours etc won't object. You would want to be pretty sure that you could get this permission before making the purchase otherwise you could be left with another house that you cannot use.


www.betterbusinessresults.com
 
Thanks for that BetterBiz!

Yep I have thought about planning permission and have already talked to the local County Council and have sounded out some of the neighbours.

When you say
Generally the rates on them are usually higher
Click to expand...
how much higher do you think? Are we talking rates of 6% /7%?

The reason I ask is that I'd like to put together a business plan and would like to factor in the mortgage cost?

I have heard of local authority grants for updating creche facilities which I must look into also.
 
There are some capital allowances available for buildings used for certain childcare facilities. These may be nice to avail of and may make the project even more viable!

One of the conditions of the relief is that the building cannot be in use as a house or be part of a house. Speak to a tax advisor though and you may be able to avail of something!
 
Hi laragh,
The following link has some info about commercial mortages in Ireland and a repayment calculator [broken link removed]

It gives the following info:
The rate used in the calculation is based on a margin of 2.25 over Euribor. Commercial mortgages are priced on the basis of a margin over cost of funds. The current euribor rate is 3.50.

Lenders usually charge an arrangement fee in the region of 0.5% to 1% of the amount borrowed.

So for your business plan I think you are right to base it on a rate of 6-7%

www.betterbusinessresults.com
 
Have you put together a business plan for your new venture?

Is it neccessary for you to actually own the property? Have you looked at other alternatives such as renting or leasing.

I see a new creche near me is a converted B&B. I think they needed planning permission but it would have been easier to get planning for a change from one commercial use to another.

You also should consider proximity to schools and parking for drop off / pick up.
 
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