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.

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.