Commercial Property
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Step 2 See If You Qualify
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Step 3 Apply Online
Your case will be submitted to the lender, where we will be keeping in touch with the lender until the offer is issued.
Step 4 Track & Chase
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Commercial Mortgage
A commercial mortgage is a loan specifically designed to finance the purchase or refinance of commercial property. It differs from a residential mortgage in that it caters to businesses and investors who plan to use the property for commercial purposes. This type of mortgage can be used to acquire various commercial properties, including office buildings, retail spaces, industrial warehouses, and multifamily apartment complexes. Commercial mortgages typically have longer loan terms, ranging from 5 to 20 years, and may require a larger down payment compared to residential mortgages. The interest rates on commercial mortgages can vary based on factors such as the borrower's creditworthiness, the property's location, and the overall health of the commercial real estate market. Commercial mortgages play a crucial role in enabling businesses to secure the necessary funds to establish or expand their operations, ultimately contributing to economic growth and development.
“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.”
Franklin D. Roosevelt
Frequently Asked Questions - Mortgage guide
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Mortgage loans can be divided into two categories:
Owner-occupier mortgages: This is used to buy property that will be used as trading premises for your business.
Commercial investment mortgages: This is used for property you’re planning to let out.
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Most commercial mortgages are paid at a variable rate. Typically, a rate will be quoted as X% over base or LIBOR, and this in residential terms would be called a tracker mortgage. Fixed rate mortgages are available and for amounts under £500,000, where the lender takes the rate risk themselves, they may be advantageous.
The rates charged for commercial mortgages and business loans are not determined from the off-set like most personal loans are. Lenders usually have a risk profile that they work to, so if your loan falls outside their risk profile it will be refused.
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Arrangement fees: Arrangement fees are typically added to the loan after the loan is approved but some lenders may request the arrangement fees earlier to cover their work in case you don't accept their offer. Arrangement fees are usually 1% -2% of the loan amount for loans up to £1 million.
Valuation Fees: A valuer will visit the property and write a report to the lender. Commercial valuations can start at around £500 for a simple case, the fees are based on an individualised quotation which is payable to the lender after an initial indicative offer has been accepted.
Legal Fees: You’ll need to pay both your own legal fees as well as the lender’s which can start at around £500 for each party.
Broker fees: A broker gives you advice specific to your situation and real estate and presents your case to the lenders. Their service is usually charged at up to 1% of the loan value.
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In order for you to qualify for a commercial mortgage, you’ll need to pass the lender’s eligibility checks which usually includes:
The cash flow and any debts you may owe to assess the financial health of your company
Your businesses’ projected income to determine whether you can cover the cost of the loan
Your ability to pay the deposit which can range from 20% to 40% of the loan
Rental income may also be taken into account as this will have an effect on your business’ cash flow
General income, credit and assets
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There are several alternative options you can choose from if you decide that a business mortgage is not the right choice for you:
Bridging loans can help you complete the purchase of a property before you manage to sell your existing home.
Short-term loans can help you access funds without making any long-term commitments. This is often used for financial relief to cover working capital, cash flow, and a variety of expenses.
Personal loans can be used to borrow anywhere from say £1,000 to £25,000 - you do not have to be a homeowner to apply.