Author: Gary Hemming CeMAP CeFA CeRGI CSP
20+ years experience in commercial mortgages
Large commercial mortgages explained
What is a large commercial mortgage?
The phrase ‘large commercial mortgage’ is usually used to describe a commercial mortgage that’s over £1,000,000. These products are a type of mortgage that’s secured against commercial property, whether occupied by the borrower’s own business, or let to a third party.
When borrowing against a property that will be occupied by your own business, your product would be a type of business mortgage.
When buying a commercial property that will be let out to a third party, your product would be a type of commercial investment mortgage.
Large loans can be offered for both commercial and semi-commercial mortgage applications.
How do they work?
They can be arranged on a capital repayment, or interest only basis and are secured by way of first legal charge over a property. In some instances, they can be secured over more than one property.
They are usually paid monthly, much like a residential mortgage – although other payment structures are possible, such as quarterly, or even seasonal payments.
How long does an application take to complete?
On average, we’re able to complete large commercial mortgages in 6-12 weeks. The exact timescale for your completion will depend on the complexity of your application.
Our team of advisors will usually be able to give you a guide based on your circumstances during the first phone conversation.
Key product features
Key Features
Max LTV
Up to 75%
Interest rate
From 2.5%
Repayment types
Capital repayment, interest only or part and part
Term
5-30 years
Interest type
Fixed or variable available
Acceptable security
Any commercial or semi-commercial property considered. Land
accepted on a case by case basis
Criteria
Loans from £1,000,000 with no maximum loan size
Available to individuals, partnerships, LLPs, Ltd companies, offshore companies, foreign nationals and pension funds
Minimum applicant age 18 years – no maximum age
Available in England, Scotland, Wales and Northern Ireland
Adverse credit accepted (on a case by case basis)
Products with no early repayment charges available
Costs of a large commercial mortgage
What interest rate will I pay?
Large commercial mortgage rates start at 2.1% per annum, with rates of 2.25-5.5% being common.
The rate you pay depends several factors, including your industry, the property that you’re borrowing against, whether you will occupy or let the property, your loan size and your credit history.
The stronger the application in the above areas, the lower the rate that you’ll pay.
Are there other set up costs?
On top of the interest charged, you will usually be charged a number of fees. The main ones to consider are:
Lender arrangement fee – This fee is usually between 0.75-2% of the loan amount. This fee is charged when the application completes and can usually be added to the loan.
Broker fee – Although we don’t charge fees when arranging large commercial mortgages, many brokers do. Where charged, these fees are often 1-1.5% of the loan amount, although they can vary.
Valuation fee – The valuation fee (also known as a survey fee) is a fee paid to a chartered surveyor to inspect, and produce a report on the security property. The cost of appointing a surveyor varies depending on the type, location and value of the property.
Legal fees – These fees are generally paid towards the end of the process. You’re usually responsible for payment of both your own, and the lenders legal expenses. Again, these fees vary depending on the transaction type, loan size and lender.
How much can I borrow
What loan sizes can you offer?
Our minimum loan is £25,000 with no maximum loan size.
What is your maximum loan to value?
Large commercial mortgages are available up to 80% of the property value, where the occupier is also the borrower. This is reduced for some industries, as well as for applicants with a history of adverse credit. Applications are available on interest-only or capital repayment.
Interest-only applications are usually capped at 75% LTV.
Some industries, such as doctors and dentists can borrow more than 80%, subject to meeting their chosen lenders criteria.
Where the property is to be let, the maximum LTV is usually restricted to 75% LTV.
What if I’m buying a property which is VAT registered?
Where VAT must be paid on the acquisition of a property, we can fund up to 100% of the amount due, often on the same terms offered on the commercial mortgage.
Where this facility is taken up, the amount is simply repaid on successful reclaim of the VAT.
Where to get a large commercial mortgage
The documents required when making an application
When making a new application, you must generally provide the following:
- Your latest 2 years trading accounts
- Proof of ID & address
- Asset & liability statement
- 6 months of business & personal bank statements
Should I use a broker?
As the size of the loan increases, lenders will be more thorough in the checking of the application. Unless carefully managed, the application can take a very long time. In addition to this, the negotiations around interest rate will often be more difficult to manage.
When using a broker to arrange a commercial mortgage in excess of £1,000,000 – it’s important they are experienced in this area. Without the necessary experience and contacts, the chances of your application being successful may be slim.
We’ve worked with clients across all sectors to arrange market leading commercial mortgage rates.
Who can get a large commercial mortgage?
Who can apply for a large commercial mortgage?
We can lend to the following:
- Individuals
- Non-UK based individuals
- Partnerships
- Pension funds
- Limited companies
- Offshore companies
Can you offer loans to applicants with bad credit?
Yes, we work with lenders across the market, which allows us to offer commercial mortgages to applicants who have suffered adverse credit. These products are known as bad credit commercial mortgages.
We can arrange loans for borrowers who have previous defaults, CCJs, mortgage arrears, IVAs, bankruptcies and repossessions.
Frequently Asked Questions
How much deposit will I be expected to put down?
Our commercial mortgage comparison page, which shows the latest products and their maximum loan to values.
Large commercial mortgages usually benefit from lower interest rates as lenders will compete for your application. In many cases, this increased competition allows us to negotiate your interest rate down.
Can lending be agreed across multiple properties?
Yes, we can offer funding across multiple securities, with no maximum. Of course, the security offered will need to have survey reports undertaken on them.
The logistics of arranging this tends to be the largest hurdle to funding very large portfolios.
