If you are looking to purchase a freehold office or industrial unit we can help by providing a competitive and cost effective finance solution.
Lenders view the commercial sector as excellent security on the basis of owner occupier status, strong lease covenants, recurring incomes and property values.
The terms of a loan against a commercial or industrial property vary from lender to lender but as a general rule, the following will apply:
- Up to 80% loan to value for owner occupied
- Up to 60% loan to value for investment
- 5 – 25 year mortgage terms
Factors affecting your mortgage application
There are a number of factors which can help to make your application more attractive to a lender:
- A deposit of 20% or more
- Ideally proof of experience in the sector
- Good personal credit history
- If you currently operate a business the lender will ask to see your businesses trading accounts to prove business competence
- Comprehensive debt proposal from Stewart Hindley & Partners
Contact us today to find out how we can help you finance your business.
What is a commercial mortgage?
The biggest difference with other type of mortgages, such as a residential mortgage, is the type of property for which funding is required; in this case it would be an office, industrial unit or a shop for your business to use. The property might actually be an investment to you, where tenants pay rent you a rent and in turn you pay the mortgage.
The standard process is that an application is submitted by us, the property is valued and when approved, a mortgage offer is issued by the bank and the transaction is completed.
In addition, because commercial properties can take longer to sell than residential property, all lenders regard them as a higher risk, and for this reason the customer normally pays a slightly higher interest rate.
When do you need a commercial property mortgage?
Commercial mortgages generally take over where business loans end. Small Business loans up to £25,000 are unsecured, but for larger amounts lenders require security in order to reduce the risk to themselves. Because of the legal and administrative costs of taking security on commercial property, it is considered uneconomic to borrow under £100,000.
Why use a broker?
It makes sense to use a specialist commercial broker who has the contacts and market knowledge to get you the best deal. The broker has to present your case to the lenders, so you must be truthful and fully co-operative in your dealings with your broker.
Do not try to use several brokers simultaneously, you will be embarrassed and may end up empty handed. Brokers who are members of the NACFB can be relied upon to have Professional Indemnity insurance and to abide by a code of practice
How much can I borrow?
For owner-occupied property, you can achieve a 70-75% mortgage. If it is an investment property, the amount you can borrow will be determined by the rental income generated by the investment – this cannot exceed 65% of the purchase price.
To find out more, please call us on 01488 684834.