Large Commercial Mortgages

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What we cover in this article:

  • Large mortgages explained
  • Costs of a large commercial mortgage
  • How much can I borrow?
  • Where to get a large commercial mortgage
  • Who can get a large commercial mortgage?
  • FAQs
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    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.

    How do they work?

    These loans 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.

    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.

    We can arrange loans for borrowers who have previous defaults, CCJs, mortgage arrears, IVAs, bankruptcies and repossessions.

    FAQs

    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.

    Why Use ABC Finance To Arrange Your Large Commercial Mortgage?

    Established in the year 2000 and fully FCA regulated, we’ve been arranging complex, and large commercial mortgage applications since the very beginning, and are very well connected across the market.

    These strong relationships enable us to secure the best possible rates for our clients, quickly. When you enquire online, you will be contacted by your dedicated case manager, who will talk through your circumstances. Within two hours of the conversation, you will have written terms delivered to your email inbox and your case manager will be on hand to talk it through.

    If you decide to proceed, we can fill out the paperwork for you over the phone and submit your application, along with a full report on the transaction to the chosen lender. Once submitted, we manage your application for you, right through until the loan is completed.

    Enquire online to get started with your large commercial mortgage application.

    about-the-author-gary-hemming

    About The Author

    This content was produced by our Commercial Lending Director, Gary Hemming. Gary has over 15 years’ experience in financial services and specialises in bridging loans, commercial mortgages, development finance and business loans. He is widely respected in his field and regularly provides expert commentary for specialist trade publications, specialist business press as well as local and national press.

    Gary Hemming CeMAP CeFA CeRGI CSP  -  
    Commercial Lending Director

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