Documents that are always required
Regardless of the purpose of your commercial mortgage application, the lender will usually require certain documents from you before they can proceed. They are:
Owner-occupied commercial mortgages
When applying for an owner-occupied business mortgage, you will usually be asked for the following:
- 2 years’ trading accounts – – Trading accounts are used to assess affordability of the new loan. Affordability calculations run deeper than just checking the net profit figure. The trading accounts show a detailed picture of the financial health of a business.
- 6 months’ business bank statements – Much like personal bank statements, business bank statements are used to check account conduct and cash flow. Bank statements are not required where a business is being purchased along with its premises.
- Details of any likely changes to your future turnover or profit – If the prospects of the business are significantly different to the current position, the lender will want to know. Likely changes are reductions in costs, increases in trade or operating methods.
Commercial investment mortgages
The documents required when arranging a commercial investment mortgage are:
- Details of the tenant and a copy of the lease – The rental income is the money that will be used to maintain the mortgage payments. As the rental income relies on the lease, the lender will be keen to fully assess the lease to ensure the income is secure. The full lease will always be required, with no pages missing.
- Details of any other investment properties – If you own any other investment properties, the lender will want the following details for each property to give them an insight into the overall health of the portfolio:
– Property value
– Amount owed
– Rental income
– Lease length
– Monthly mortgage payment
Although some lenders will not require the above information on every application, they are requested on almost every application. When your application is submitted and you’re eager to have it agreed quickly, every day counts.
By supplying a full application pack to the lender, you make it much easier for them to say ‘yes’. Prepare the documents upfront and you can create a strong first impression with the lender, increasing your chances of having your application approved.