What Is A Commercial Mortgage?
When buying a business property, you could face costs of around 2.5% to 7% per year depending on your circumstances. Commercial Mortgages are designed to help people purchase commercial properties for their trading business or investment purposes.
How Much Can I Borrow?
Commercial Mortgages are based on the principle of loan to value (LTV). This is worked out by dividing the loan amount by the value of the property and multiplying it by 100 and is expressed as a percentage.
For a trading business, we are able to lend up to a maximum of 80% LTV. This means the remaining 20% is to be made up of your deposit. For Example:-
A business owner is currently renting the property he is trading from and his landlord has informed him that he wishes to sell, offering his tenant the option of buying the building for £250,000. After discussing his circumstances it is agreed that he can borrow up to 80% LTV and has to pay 20% deposit. This would be worked out by taking the purchase price (£250,000) and multiplying it by 20%. This gives a deposit of £50,000 – meaning he is able to take out a commercial mortgage of £200,000 to complete the purchase, subject to meeting all other qualifying criteria.
Do You Lend On Investment Properties?
Yes, if you’re looking to purchase a commercial property as an investment with a view to renting it out, as commercial finance brokers we are able to help and offer market leading commercial mortgage rates through our extensive panel of lenders.
Each case tends to be judged on its own merits with costs and criteria varying wildly from lender to lender. By discussing your needs with one of our experts we will be able to talk through the process based on your own circumstances and give you an indication of what you might expect to achieve.
Can The Costs Vary?
Yes, in some circumstances, commercial mortgage rates can be above 7% or below 2.5%, but these applications tend to be the exception rather than the rule.
When looking to secure a commercial property mortgage, it is recommended you talk through your circumstances as early as possible in the process to ensure you are fully aware of the costs and likely timescales involved in your application well before you are committed to the completion of the transaction.
How Does The Process Work?
Regardless of whether you are a business owner or property investor, we are able to make the process of applying for a commercial property mortgage easy. Below is an example of the process for a typical application for a commercial property mortgage:-
- Contact us by either enquiring through our website or calling us on 0800 088 6008 and we will discuss your current circumstances and what you’re trying to achieve, offering initial terms of what we believe will be possible.
- We will send out a decision in principle within 2 hours outlining the terms available with the best commercial mortgage rates available to you including any fees and charges that may be payable. Before issuing terms we always ensure the lender will be appropriate in terms of both costs and other factors that may be important such as the need to switch your commercial banking.
- Once you are happy with the terms and understand exactly how the product works we will start the application with the lender for initial assessment. We then push to get the case sanctioned – this means the lenders’ credit committee are happy with the application subject to survey and legal work.
- Valuation takes place and the report is returned to the lender, once this is checked and considered satisfactory a full offer of lending is made.
- Now the legal work will step up and once it’s all done and everything is signed you are free to draw down on your loan and complete on your property transaction/refinance.
Are You Able To Raise Money For My Deposit If I Can’t Afford The Minimum Amount?
Yes – If you own other properties, or have a profitable trading business there is a good chance we will be able to assist you in raising your deposit should you struggle to do so through savings. A consideration of this is, is that there will be an additional monthly payment as a result of the extra borrowing. The effect this may have on your ability to pay the main commercial property mortgage has to be taken into account.
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 Have Access To Lenders That I Can’t Approach Directly?
Yes – We work with all of the major banks and lenders you may well be familiar with but also offer products from many lenders who don’t tend to be well known by the public and even lenders who work only through small and exclusive panels of expert commercial mortgage brokers – the likes of InterBay and Shawbrook Bank. Access to these lenders is not available through most brokers and can’t be achieved by going directly to them.
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 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 to ensure the client understands the process, feels comfortable and receives the answers they need quickly and in an easy to understands manner.
To discuss your particular requirements and to speak with one of our commercial mortgage specialists, contact us now and we will be happy to help. Alternatively click here to read The Complete Guide to Commercial Mortgages or click here to try out our Commercial Mortgages Calculator.