What are the benefits of refinancing a commercial mortgage?

Buying a commercial property can be a prudent investment. And, over recent years, the popularity of commercial property investment has increased rapidly, with investors looking for new opportunities to make substantial returns on their investments.

For businesses or individuals who own commercial property, refinancing their commercial mortgage can allow them to free up funds and change the terms of the mortgage.

If you’re a commercial property owner looking to refinance your commercial property, you have certainly landed in the right place. Within this article, we’ve taken a look at the benefits of refinancing a commercial mortgage.

 

What is a commercial mortgage?

A commercial mortgage is a mortgage used to purchase a commercial property. The repayments can be structured either with fixed or variable interest rate payments, depending on the terms of the lender.

As well as purchasing a commercial property, this type of mortgage can also be used to develop new premises, buy land, expand business premises, complete commercial developments and projects, or develop an existing property.

 

How does commercial mortgage refinancing work?

Many commercial property owners choose to re-mortgage their commercial premises as a way of accessing additional funds.

But what does the process involve?

Refinancing a commercial mortgage involves paying one mortgage off in order to replace it with another. This process allows commercial property owners to not only secure a better interest rate, but it can also free up more cash to invest in their business.

Whether you own or part-own a commercial property, you can re-mortgage and negotiate new terms with your lender, providing that you have a proven track record for making your mortgage repayments. You may also choose to look elsewhere for better deals but, if you’re switching to a new lender, they will expect you to pass their affordability and eligibility checks.

 

Why refinance a commercial mortgage?

Property owners choose to refinance their commercial mortgages for a number of reasons, including:

Releasing equity from the commercial property

Refinancing a commercial mortgage will allow you to release any equity you have built up since you took out the initial mortgage. This capital can then be used to invest in the business, improve cash flow, or buy additional properties.

Secure a better deal

Refinancing your commercial mortgage may allow you to access a better interest rate or better terms. If, for example, your fixed rate is coming to an end, refinancing may help you secure a better deal than being switched over to the lender’s standard variable rate.

Keep in mind that, if you switch to a new lender, you may be liable to pay an early exit fee.

 

Borrow more

If the value of your commercial property has increased since you took out your current mortgage, you might be able to borrow more against the value of the property. This can be useful if you want to free up funds to carry out renovations or maintenance on the property or expand the business.

 

Change the type of mortgage

If you are planning to change the mortgage from an owner-occupier agreement to a commercial investment, refinancing can allow you to do this. This can be useful if, for example, your business has outgrown the property and you want to let it yet rather than sell it.

 

What are the pros and cons of refinancing your commercial mortgage?

 

The pros

The benefits of refinancing a commercial mortgage are:

  • Access better deals
  • Reduce monthly outgoings
  • Release equity from the property
  • Access funds needed to grow and expand businesses

 

The cons

Of course, as with any type of financing, there are also potential downsides to consider if you’re thinking of refinancing your commercial mortgage, including:

  • The repayment period may be extended
  • Additional fees such as broker fees, valuation fees, and legal fees

 

Find out more

If you’re looking to refinance a commercial mortgage, it’s important to speak to someone experienced in the sector to ensure that you are aware of all the funding options available to you. Speak to one of our skilled and experienced team; we are always on hand to answer any of your queries regarding commercial mortgages. Get in touch today.

What is the difference between a guest house and a hotel?

When choosing somewhere to stay, many travellers automatically think of hotels. But there are a whole host of other accommodation options available, including guest houses.

The boundaries between a guest house and a hotel can sometimes be blurred; after all, both are based on the same principle of providing accommodation to paying guests.

However, there are a number of key differences that differentiate these two types of accommodation.

 

What is a guest house?

A guest house is a private house, which provides accommodation for guests. Guest houses are usually owner-operated, with many hosts actually living on the premises. The vast majority of UK guest houses have no more than 5 bedrooms and offer a distinctly home-from-home feel.

 

What is a hotel?

A hotel also caterers for customers who require overnight accommodation. However, the hotels are typically bigger than guest houses, have more facilities, and can accommodate more guests. They can often hold hundreds of guests at any one time and are frequently part of larger chains.

 

What are the differences between a guest house and a hotel?

The key differences between a guest house and a hotel are:

 

Size

Guest houses tend to be a lot smaller than hotels. Even though they can accommodate fewer people, guests still enjoy a comfortable stay and appreciate the many personal touches that come with guest house stays.

As guest house owners usually live on the premises, they are incredibly attentive and often go above and beyond to ensure that their guests have a great stay.

 

Price

Generally speaking, guest houses are cheaper than hotels. They can also work out more cost-effective for guests staying for longer periods as they may have access to facilities such as kitchens to cook meals in rather than always dining out, as well as clothes washing facilities.

 

Ownership

Across the hospitality sector, you will find that the vast majority of guest houses are run as family businesses and tend not to have a reception desk or a concierge service. This means guests usually receive a more personal level of service.

On the other hand, hotels are commercial businesses that employ full-time staff with dedicated roles, operate around the clock and always have lots of facilities and amenities on-site to enhance their guests’ stay.

 

Facilities

Guest houses tend to have comfortable but basic, home-style facilities. Hotels, on the other hand, typically have more facilities, including in-room mini-bars, bar and restaurant areas, gyms, and more.

 

Buying a guest house or hotel?

If you’re considering buying a commercial property, such as a guest house or hotel, it’s important to speak to someone experienced in the sector to ensure that you are aware of all the funding options available to you.

 

Get in touch to speak to one of our skilled and experienced team. We are always on hand to answer any of your queries regarding commercial mortgages.

 

 

 

How to refinance a commercial mortgage

Similar to refinancing a residential mortgage, refinancing a commercial mortgage involves switching from one commercial mortgage to another in order to release capital or save money.

If you’re looking to refinance a commercial mortgage, you’ve landed in the right place. We’ve created a helpful guide outlining everything you need to know about refinancing a commercial mortgage.

 

What is a commercial remortgage?

In simple terms, a commercial remortgage is a refinancing method for mortgages secured against a commercial property. Many commercial property owners choose to remortgage their property in order to save money on their repayments or even raise funds for their existing business or a new business venture.

 

How does a commercial remortgage work?

The process involved in refinancing a commercial mortgage is relatively simple and involves property owners replacing their existing loan with a new one. Your mortgage broker will talk through all the options available to you and try to find the best deal for your circumstances. All rates and terms will be discussed, providing a great opportunity for you to ask any questions.

With a commercial remortgage, you can:

  • switch to a better deal with a new provider
  • release equity from your commercial property
  • borrow against the value of your commercial property
  • switch from owner-occupier to commercial mortgage.

 

How much can you refinance up to?

If you’re thinking of refinancing your commercial mortgage, there is no rule on how much you can borrow. However, the lender you choose will need to be confident that you can afford to make the new repayments.

The rates you will be able to access will depend on your level of risk. You should also consider that the vast majority of commercial mortgages will come with a lender arrangement fee which is usually between 1%  to 2% of the total loan amount. You will also need to factor in valuation and legal work charges when budgeting.

 

How does it differ from a standard homebuyer remortgage?

The main difference between a commercial and homebuyer remortgage, is that commercial remortgages are designed to be applied to loans that are backed by non-residential real estate. Commercial mortgages are tailored for the commercial sector and their business needs, unlike residential mortgages which are designed for homes and residential properties.

 

Pros of commercial remortgages

Commercial remortgages offer a number of benefits, including the ability to raise funds quickly, gain access to competitive loan terms, improve cash flow if needed, and access better deals.

Despite there being lots of benefits, you should also consider that refinancing a commercial mortgage also means that you may be taking on a considerable amount of debt. With this in mind, you should always weigh up whether this is the best option for your business.

 

Why choose Stewart Hindley?

If you’re considering buying a commercial property or you’re looking to refinance a commercial mortgage, it’s important to speak to someone experienced in the sector to ensure that you are aware of all the funding options available to you. Get in touch to speak to one of our skilled and experienced team. We are always on hand to answer any of your queries regarding commercial mortgages.

Hotel Finance Guide

When it comes to securing hotel finance and fulfilling your dreams of running a successful and profitable hotel, there are a number of different finance options available.

Running a hotel opens up a host of exciting opportunities, allowing you to provide a unique, enjoyable and comfortable stay for your guests. Running a hotel can also be profitable, providing you invest in the right things.

But, to bring the vision of your hotel to life, you’ll first need to secure the necessary finance.

 

What is hotel finance?

Hotel finance refers to the funds you’ll need to invest in your hotel and get your business off the ground. This type of finance is designed to support the plans you have for your hotel and provides you with the cash you need to make your business a success.

As with any type of finance, there are a number of different hotel finance options available, including commercial mortgages and business loans for hotels.

However, in order to obtain funding for your business venture, you will need to present a robust and credible business plan to your lender, along with a sound financial model, a targeted marketing plan, and feasibility reports. This will help your lender to feel confidence in your ability to be able to pay the loan back.

 

What options are there for financing my hotel?

 

Commercial mortgages for hotels

Just like residential mortgages, commercial mortgages for hotels allow you to borrow the money you need to buy your hotel business and pay it back over an agreed term.

Many lenders are happy to provide commercial mortgages for hotels so it is important to shop around to find the right deal for you. This is where a commercial mortgage broker can be incredibly helpful.

Keep in mind that deposits for commercial properties are a lot higher than residential properties, with lenders usually asking for between 30 or 40 percent of the total value of the hotel.

 

Business loans for hotels

Business loans are another option for financing a hotel, whether you’re expanding, renovating, or just starting out.

Providing an invaluable source of income when you need it the most, business loans for hotels are available from a range of different lenders. Again, the loan that is right for you will depend on your individual financial circumstances.

Any kind of hotel business can apply for a business loan, but the rates and terms will vary depending on your circumstances. You should be aware that you will be expected to present your business plan, projections, financial forecast and more when applying for a business loan for your hotel.

 

Why choose Stewart Hindley for your hotel finance?

If you’re considering buying a commercial property, such as a hotel, it’s important to talk to someone experienced in the sector to ensure that you are aware of all the funding options available to you.

Get in touch to speak to one of our skilled and experienced team. We are always on hand to answer any of your queries regarding commercial mortgages for hotels.

How is coronavirus affecting the property market and loans?

The Covid-19 pandemic has had a significant impact on virtually all aspects of the UK economy, and it’s likely that the effects will be felt for months, or even years, to come.

And this includes the commercial property market.

What does it mean for the commercial property market?

During the initial lockdown back in March, the commercial property market was hit hard, with widespread lockdowns coming into force throughout the country. The vast majority of businesses were asked to shut their doors completely, or encourage their workforce to work from home, leaving many commercial buildings up and down the country, standing empty.

Data collected has already indicated that less than half of tenants paid their rent on time on June Quarter Day, meaning commercial property landlords only collected 38 percent of their rent.

The situation is still very unstable and the threat of a second wave of the virus, with the possibility of further regional lockdowns is very real. With this in mind, we anticipate prices and demand will fluctuate for at least the next few months as the market adjusts to the ongoing economic environment.

How have commercial property prices been affected?

There’s no denying that the retail and commercial property sector have been hit the hardest and this naturally has had an impact on commercial property prices. Experts predict that rent arrears will not only be an ongoing issue but the capital value of many commercial properties could also fall by as much as 20-30 percent.

Essentially, things are still very uncertain. However, for first time buyers in particular, this could mean there are some great deals to be found.

What does this mean for commercial mortgages?

Commercial mortgages have been a hot topic during the pandemic as they have been a great way to purchase property, or refinance a property that’s already owned. Many business owners are contacting commercial mortgage lenders for additional borrowing, for reasons such as:

  • Securing a better interest rate
  • Recouping funds
  • Reducing monthly costs
  • Gaining financial support
  • Taking advantage of the spike in the market

However, it’s important to be aware that, as with in the residential property market, commercial lenders have become far more cautious as the UK heads towards another recession. With this in mind, if you are considering purchasing a commercial property during the pandemic, you can expect lower loan-to-values and more stringent affordability checks.

That said, there are still plenty of lenders out there to choose from.

If you’re looking to take your first steps on the commercial property market, or you’re planning on selling your property and looking to secure finance, we can help you find the best deals around.  Get in touch to discuss your property finance needs.

An Introduction to Commercial Development Finance

Whether you’re looking to take your first steps onto the commercial property ladder, or you want to kick start your next project, you will probably find that you need to source commercial funding.

There are a whole host of commercial development finance solutions available for landlords, property developers and investors. But the lending market can often be overwhelming, even for the most experienced property developers and landlords.

We’ve created a helpful introduction to commercial development finance – we hope that you find it useful.

What is development finance?

Development finance is a type of loan that releases a set amount of funds in stages, in order to cover the cost of the development of a commercial property.

The funds are generally released at set stages of the project and are typically taken out over a period of six to 18 months. So, for example, funds are released in the early stages to secure the property and then at various points throughout the project to allow for construction and refurbishment.

Once the project has been successfully completed, the property can either be sold or a commercial mortgage can be taken out against it.

Whether you’re completing a short-term refurbishment project, major renovation work or a ground up development, there are lots of development finance options available, designed to accommodate your project scope and time frame.

Commercial development checklist

If you’re considering applying for commercial development finance, almost every lender will ask for the following information before they start processing your application:

  • Details about your company
  • Your development track record, including evidence of experience and proven returns
  • Six years’ business accounts and tax returns
  • A thorough breakdown of project costs
  • Detailed development plans
  • Estimated gross development value (GDV)
  • Details of assets and liabilities associated with your company
  • Exit strategy plan

The amount you’ll be able to borrow depends on a number of different factors, including your credit history, how long you need the finance for, and your track record when it comes to managing and delivering successful property development projects.

There is also a range of other development finance options that can be used to tap into the commercial property sector, including commercial mortgages, bridging loans and auction finance.

Choosing a commercial mortgage for your exit strategy

Commercial mortgages are used to purchase a wide range of commercial properties such as offices, warehouses, shops and other commercial buildings. They are commonly taken out following a commercial development project.

Just like a residential mortgage, commercial mortgages allow property developers to purchase a building and spread the cost over a set period of time.

If you’re considering buying a commercial property, it’s important to speak to someone experienced in the sector to ensure you are aware of all the funding options available to you.

 

Get in touch to speak to one of our skilled and experienced team. Here at Stewart Hindley, we are always on hand to answer any of your queries regarding commercial mortgages and commercial development finance.

How To Get Approved For a Commercial Mortgage

Commercial investment mortgages are designed to enable an individual or a company to purchase a business property as an asset. This type of mortgage is used for a wide range of commercial properties including retail complexes, hotels, restaurants, offices, warehouses, leisure facilities, land for development and public houses.

A commercial mortgage is approved to an individual or company looking to buy a business property, either to rent or to use as their own business premises. Lasting from five  to 25 years, you can usually find a 65-70% mortgage, which is a measure of loan-to-value ratio used to establish how much you will be borrowing in relation to how much the commercial property is actually worth.

If you’re purchasing a commercial building as an investment, the amount of rental income the property will generate is compared to the overall investment amount. As a general rule of thumb, this must not exceed 65% of the purchase price.

Everything you need to know about a commercial mortgage

There are a number of key features that you should be aware of before taking out a commercial mortgage, including the fact that there are no fixed fees. However, you will usually pay a higher interest rate on commercial properties than you would on residential property .

The good news is that commercial mortgages secured by a FCA approved broker typically offer better interest rates than mortgages arranged by individuals  and the interest you do pay on your commercial mortgage is tax-deductible.

Deposits for a commercial mortgage

As with any mortgage, different lenders will have different requirements when it comes to a deposit for a commercial mortgage, so this is something that you should be aware of before applying.

Most commercial mortgages require a deposit of between 30% and 40% depending on the level of risk they deem your project to carry and the type of commercial mortgage you’ve applied for.

What do you need to apply for a commercial mortgage?

Before completing your commercial mortgage application, it’s important to gather the following information so the process can run as seamlessly as possible:

  • Key business information
  • Your personal and or business Bank statements, usually covering the last three to six months
  • Trading figures, usually covering the last three years
  • Proof of identity and address
  • Lease and/or rental tenancy agreements
  • A business plan for financial projections – this will help the lender determine how likely it is that you’ll be able to pay off the loan

If you’re considering buying a commercial property, it’s important to speak to someone experienced in the sector to ensure that you are aware of all the funding options available to you.

 

Get in touch to speak to one of our skilled and experienced team. We are always on hand to answer any of your queries regarding commercial mortgages.

Business Support Finance – COVID-19

Launched in response to the coronavirus outbreak, the Coronavirus Business Interruption Loan Scheme (CBILS) is designed to support UK businesses during this period of disruption. CBILS provides the lender with a Government backed guarantee of 80%, against finance offered under CBILS with the balance of risk being held by the lender.

CBILS is designed to assist with cash flow, initially by way of a Capital Repayment Holiday (Interest only period) of 12 months or a commercial loan over 6 years, with no repayments in the first 12 months followed by a 5-year loan facility on a full repayment basis.

CBILS will only be made available to businesses that were deemed “viable pre Covid 19” and as a consequence a “robust” case must be made for your new Capital Repayment Holiday or loan based on your pre Covid trading information.

It is important to note that if your financial and supporting information isn’t presented correctly to meet the lenders requirements, this could lead to a decline for support, which may impact on your existing loan covenants when considered against your lenders’ “prevailing” debt service criteria which may give your lender cause for concern post Covid 19.

During this period of uncertainty, we at Stewart Hindley & Partners are here to help you and have direct access to all the lenders’ that offer CBILS and who are accredited by the British Business Bank. https://www.british-business-bank.co.uk/. If for any reason your business is not eligible for CBILS then we can provide other routes to finance to support your business.

Given the record levels of demand that banks are incurring for general advice and CBILS applications, we at Stewart Hindley & Partners are able to offer, on your behalf, support through our own FCA relationships with all CBILS accredited lenders.

As a result, we are able to deal with the relevant Business Relationship Manager directly, to ensure a prompt application, with the best possible outcome given your circumstances and thereby take away the uncertainty by securing a decision in-principle within 24 hours.

If you’d like to discuss how we can assist you with your CBILS application or any other funding requirement during these challenging times, then please don’t hesitate to get in touch with us either via completing the contact form or by calling us directly on 01488 684834.

How Does Property Development Finance Work?

Whether you’re a first-time property developer, a professional landlord or a seasoned property investor, there are a number of different ways to secure the finance you need to complete your first or next property development project.

From commercial mortgages and auction finance, through to first time property development finance, it’s important to determine the right property development finance option for your needs.

If you’re struggling to know where to start when it comes to securing finance for your project, we’ve taken a look at some of the options available to you.

 

First time property development finance

If you’re a first-time property developer looking to purchase your first property, one of the best options for you could be a flexible development mortgage. There are flexible development mortgages specifically for first time private developers, especially for those looking to buy a property with the view to refurbish it to rent it out.

 

Sources of property development finance

Properties at auction tend to be a lot more affordable than those listed on the market, making them a great way to purchase your first or second property. When you purchase a property at auction, you will usually be expected to pay for it within a month of securing the sale. However, some lenders will offer auction finance known as a short-term bridging loan. This means that you can access funds quickly when needed and refinance the house once the work is completed.

If you are interested in developing a private or commercial property, commercial mortgage options will give you the funds to purchase a commercial property such as a shop, warehouse or office.

Of course, it’s not just the price of the property you will need to take into account when securing finance to put towards the purchase of a property development. You should also consider the amount of refurbishment work that is required and whether or not it is a ground-up development.

 

Securing property development finance

At Stewart Hindley, we understand that the right investment is crucial when it comes to acquiring the funds you need for your new property venture. Get in touch today to find out how we can help you to obtain the best option for your financial circumstances.

How are GP Practices funded?

All of us use NHS services in some shape or form, including visiting our local GP when we feel unwell. But have you ever wondered how GP practices are funded or how a GP surgery works?

Many patients fail to understand that GP surgeries are run like a business and rely heavily on funding to provide a high standard of care to a set number of patients. This is one of the reasons why cancelling GP appointments or not turning up to a GP appointment can have a huge impact on GP’s budget and the services they are able to offer.

How are GP practices funded in England?

Throughout England, GP surgeries receive on average, £152. 04 per person, with England’s 7,543 general practices sharing £9,050,006 million. And this is to deliver care for approximately 59,527,981. These figures are based on data released in the 2017/2018 financial year.

The NHS offers three different types of contracts for GP practices, which impact the services they are able to offer. These may include General Medical Services, Personal Medical Services and Alternative Provider Medical Services.

The amount allocated to each GP practice depends on the type of contract provided.

How are GP practices funded in Scotland?

The way GP practices are funded in Scotland is different to England, following a vote for a new GP contract in Scotland that has changed the way Scottish GP practices are funded.

Set out in two phases, the changes outlined have also had an impact on GP pay structures. Phase one took place in April 2018 when the GP Workload Formula was introduced. The new formula has been designed to re-estimate the number of consultations per patient based on age, sex and deprivation. It has relieved the pressure on the workload of GPs in Scotland as it provides a more accurate reflection of patient inflow and demand.

Phase two is set to be introduced in 2020/2021 and although it is still subject to further negotiations between the Scottish government and GPC Scotland, the plans will aim to introduce a standard income range for GPs with a set pay progression. The main purpose of this change will be to remove the link between the new formula and practice funding.

All GP practices will still be required to submit annual data on earnings, expenses and hours worked to NHS National Services Scotland Practitioner Services.

Why do GP practices need GP surgery finance?

There are many reasons why medical professionals might require GP practice finance, including:

  • If a partner is leaving and the remaining partners need to buy them out
  • If the partnership is increasing and a loan is required to be split between the existing partners in order to dilute their shares
  • If practice improvements or extensions are required
  • If a new practice is being set up

At Stewart Hindley, we understand that the right investment is crucial when it comes to providing primary healthcare. Whether you’re looking for funding for an NHS GP practice or a private surgery, we’ve got the skills and specialist experience to help you secure commercial finance for your GP surgery. To find out more, get in touch.