Commercial Mortgage Case Studies

We always put the customer first, offering impartial advice and maintaining close relationships with our trusted panel of lenders. If you’re considering taking out a commercial mortgage on a business property, this benefits you as we can source the best rates and products to match your requirements.

To learn more about the types of service we offer, see below for a selection of case studies focused on successful commercial mortgage applications.

Want more information on what we offer? Take a look through our guides and get answers to the most frequently asked questions on commercial mortgages.

Read our case studies below or check our guide to the commercial mortgage process.

Case Study 1 – Refinancing Properties

Our clients each run very successful businesses along with having joint ventures and have done so since 1999.

Under one of their limited companies – used for their property investments – they own two commercial premises that they were looking to refinance to expand on their portfolio. They have had blue chip tenants in each property for a number of years giving secure rental history.

Finance Terms

Upon application, the properties had a small amount of finance on them with a high street lender which was spread over them both. The clients were naturally looking for the best deal available.

• Loan Amount – £344,250
• Combined Valuation – £620,000
• Rate – 4.25%
• Term – 25 years
• Monthly Payment – £1,865
• Repayment Method – Repayment
• Lender Arrangement Fee – £5,100

Solution

Upon obtaining leases for the commercial premises it was picked up that one of them had in fact gone onto a rolling contract which meant we had to change direction in our sourcing as the majority of the lenders were put off by this.

As we have access to the whole market, we were able to discuss the case with a ‘top of the list’ lender, however, the initial decision was the same – they would not want the property that had the rolling lease.

We were advised by them to refer the case details along with a strong justification of why their lending would be secure over both properties and the underwriter came back completely agreeing with us. We were successful in

Case Study 2 -Business Premises Relocation

Our clients have experience in private hire, individually on a sole trader self-employed basis which covers their own personal / family living expenditure.

Their business is geared towards longer term contracts and had a successful first year trading. Their annual income from contract work would grow year on year when they move to their new premises.

They had located an older double fronted warehouse unit and yard which was perfect for their future plans and progressions. The size of the property and yard would enable their planned growth without the need to move again.

Finance Terms

Naturally our clients were looking for the best deal possible deal, from submission of their details the lender took only 24 hours to request a meeting with them.

• Loan Amount – £119,000
• Valuation – £150,000
• Rate – 3.1% over base
• Term – 15 years
• Monthly Payment – £769.00
• Repayment Method – Repayment
• Lender Arrangement Fee – £1,785

Solution

The property was not in the best of conditions, the valuer commented that there were about £25,000 worth of repairs. There was also a tenant in situ and the lender needed confirmation that the property would be vacant upon our client’s possession of the property.

Working closely with the client and the lender in tandem we were able to pr

Case Study 3 -Childcare Business

Our client has been trading successfully since 2009 in the childcare sector and has earned a very reputable name and secure business.

They had the opportunity to purchase the property that they had been renting and trading from for the last eight and half years. The property was fit for purpose with no changes needed to be made upon purchase and was situated in the perfect location, close to the local schools and within a large residential area making the demand for these services invaluable.

Finance Terms

This was a simple purchase with a 66% loan to value with sufficient income on the accounts which more than supported the application. From initial enquiry to the lender wanting to arrange a meeting with the client took only 24 hours.

• Loan Amount – £147,000
• Valuation – £210,000
• Rate – 2.99% over base
• Term – 15 years
• Monthly Payment – £1,003.66
• Repayment Method – Repayment
• Lender Arrangement Fee – £2,100

Solution

Although there were a few legal hurdles to overcome with regards to an Asbestos report and part of the building having a flat roof, these were all overcome by ABC Finance working closely with the client and the solicitors.

Case Study 4 – Commercial & Residential Refurbishment

Our clients are experienced property developers and purchased a commercial building using a development finance facility to allow them to refurbish the retail units and create residential units above. The property, located in Surrey, comprised of two shops and 14 flats which were to be let out.

As interest was being added to the development loan on a monthly basis, the funding facility needed to be repaid quickly to avoid increased costs.

Given the desirable location of the property and the quality of the development, both the retail shops and the flats were in high demand. This was great for our clients as it gave them the confidence that any potential future rental voids would be kept to a minimum.

Finance Terms

A commercial investment mortgage was required to repay the development loan. Our clients were very rate conscious and, of course, speed was crucial to the deal.

After a discussing the client’s needs and preferences we had a good idea of who would be the best lender for them but to make double sure we were going down the right track, the enquiry was discussed with several lenders to ensure the timescales were feasible.

It was discovered that the clients had a small banking facility with the chosen lender therefore the lender could see a good track record which helped when the application was underwritten.

• Loan Amount – £1,500,000
• Valuation – £3,680,000
• Rate – 2.55% over base
• Term – 5 years
• Monthly Payment – £5,905.00
• Repayment Method – Part & Part
• Lender Arrangement Fee – 1.5%

Solution

The clients were nearing the end of the development finance term and heading for an expensive default interest rate therefore speed was a necessity. When the application was submitted there were no signed leases for the retail shops as negotiations with potential tenants were still ongoing.

Also, only six of the 14 flats were let out with the remaining flats only recently advertised with a letting agent, therefore any interest in them from prospective tenants was in the early stages. We managed to obtain a mortgage offer, subject to valuation and tenancy agreement and leases, in 13 business days which was enough to keep the development finance lender happy and the client’s conveyancer could get this moving.

Case Study 5 – Portfolio Expansion

and involved in the restaurant trade for over 10 years.

The three properties that the client wanted to raise money on are all occupied by Indian Restaurants. Two were are let to tenants and the other was owner-occupied as a trading business. The let properties were on 10+ year leases, with strong rental yields, providing excellent security for potential lenders.

The properties were traditional retail properties, in high street locations, which were reasonably desirable and had strong demand.

Finance Terms

All three properties were mortgaged with a high street lender, who were unwilling to offer the client additional borrowing. The client needed more funds to purchase a further investment property, which would increase monthly income.

As well as the client wanting to raise extra money on the properties it also gave them the opportunity to look for a better rate. The client was looking to borrow the money on a capital repayment basis and was keen to keep monthly repayments under £3,000 per month.

The total rental income received from the investment properties was £3,341.67 per month.

• Loan Amount – £530,000
• Combined Valuation – £910,000
• Rate – 2.85% above base rate
• Monthly Payment – £2,772
• Repayment Method – Repayment
• Lender Arrangement Fee – 0.75%

Solution

This application presented a challenge as the client was keen to group the properties together under one application. This was tricky as two of the properties were commercial investments, with the other being owner-occupied.

Each of the properties had previously been occupied by the borrower. They had built up the trade in each property, before letting it at a premium rent, based on the strong trade, which was immediately available. This excluded a lot of lenders from the market, as they weren’t comfortable with the mixture of owner-occupied and investment properties on one application.

We were able to secure funding for the applicant on the below terms using a blend of rental income and the net profit of the owner-occupied restaurant.

The loan was funded through a highly-regarded challenger bank at a very low rate, which represented a significant saving for the client.