What Is A Commercial Mortgage?
A commercial mortgage is a mortgage loan secured by a commercial property, such as an office, warehouse or shop.
A semi-commercial mortgage covers a property such as a shop with a flat above. They are used to secure property for either occupation by the owners business or to be held as an investment.
Commercial mortgages can be used to borrow against a wide variety of property types, including commercial buildings, land and even residential property.
Raising a commercial mortgage against typically residential property is the exception rather than the rule. This will usually happen in one of two situations. Firstly, the property is used for part residential and part commercial reasons, such as a large house that is partly used as a B&B. Secondly, a large block of apartments would be difficult to finance using a traditional buy to let due to the number of units.
In this situation a commercial view would need to be taken and as such a commercial mortgage would be more appropriate.
Of course, there are a number of combinations of circumstances that could lead to different products being available. If you’re unsure which product is right for your situation, speak to an experienced advisor who will be able to talk it through with you.
How Does The Process Work?
- Talk through your needs with one of our commercial mortgage experts, who will talk through the project to assess the application.
- Assuming the application is viable, you will then receive a quote in writing detailing the interest rate, fees and headline borrowing terms, along with what documents are required to submit a full application.
- The forms will be completed and submitted to the lender alongside a comprehensive report on the project.
- If the lender is happy with the application so far they may want to meet you. At this point, we would arrange the meeting for you at a time and place convenient to you.
- Once comfortable, the lending manager will usually take your application to the credit committee. These are the underwriters who sign off the application as acceptable to the lender. Once approved, the lender will issue the formal offer, subject to valuation and legal work.
- Your formal offer will be issued.
- A surveyor is instructed to compile a valuation report on the property. It will be comprehensive and may take longer than a residential valuation to complete.
- Your solicitor is instructed to carry out the legal work and satisfy all conditions. They will run through the terms of the agreement and ensure you fully understand the loan. Once satisfied, you will sign the formal offer and return it to the lender. It is important that your solicitor is experienced in dealing with commercial mortgages as inexperience here can slow the process down significantly.
- Once all of this is done, the funds can be released and the loan completed.
Taking Out A Commercial Property Mortgage For The First Time
When taking out a commercial mortgage for the first time, many people use their experience of taking out a residential mortgage as a reference point. This approach does work as there are a number of similarities and just a few differences.
A commercial mortgage tends to take slightly longer when compared to its residential equivalent. Residential mortgages tend to be heavily automated, with very little manual underwriting. Commercial mortgages are the opposite in this regard, with applications manually processed and agreed. Although this slows the process down, it does have a major advantage, as it does mean that a more common-sense approach can be taken.
Every business can run in a very different way. Their finances and ways of doing things can be completely different. This can be true even of two competitors who appear on the outside to be almost identical.
Due to these dramatic differences, underwriters have to be flexible and look at each application with an open mind. Setting hard and fast rules can prove counterproductive for commercial mortgage lenders.
Painting the whole picture to a lender is crucial to getting the best possible deal and ensuring your case completes quickly.
What Types Of Property Can You Lend On?
We can offer commercial property mortgages on almost any type of commercial property, including:-
- Care Homes
- Doctors Surgeries
- B&Bs & Hotels
- Pubs & Restaurants
- Retail / Shops
- Property Portfolios
We can only cover a small selection in the scope of this page, but if you have a property you wish to discuss get in touch and we will be happy to consider it. Through our connections at many lenders, we are able to offer commercial mortgages on almost any security.
Do You Offer Commercial Mortgages For People With Adverse Credit?
Yes – As a whole of market commercial mortgage broker, we have access to products to suit adverse credit. Although many commercial property mortgage Lenders can shy away from lending to people with adverse credit, we are able to secure funding for clients despite their previous issues.
We have secured finance for many clients who have faced or are currently facing financial difficulties and even have access to lenders who specialise in this area.
Why Should I Work With ABC Finance To Arrange My Commercial Property Mortgage?
At ABC Finance we have an experienced and highly knowledgeable team of specialist advisors and by selecting us as your commercial mortgage broker your application will be in safe hands.
We make sure every enquiry we receive is managed carefully. We ensure every client understands the process, feels comfortable and receives the answers they need quickly and in an easy to understand manner.
To discuss your particular requirements and to speak with one of our experienced specialists, contact us now and we will be happy to help. Alternatively you can compare commercial mortgage products or try out our Commercial Mortgage Calculator.