Do you have no commercial experience but want a commercial mortgage?

24 Oct 2019

Do you have no commercial experience but want a commercial mortgage?

With a lower stamp duty payable and higher yields, it’s no secret that mixed-use / semi-commercial properties are all the rage with residential landlords.

When it comes to lending there are certain things to look out for when purchasing a commercial investment property, especially if it is your first one. We shall endeavour and try and demonstrate here what will increase your chances of securing finance.

Do you have what it takes to secure lending?

Lenders normally require landlords to have a certain amount of experience in the running of mixed-use / commercial properties as they believe it leads to the successful return of their lending, however, everyone needs an opportunity to get on the ladder somehow. Having the following will greatly increase your chances of securing the lending you require:

  • Have ownership of your home
  • Have regular income in the form of salary or rent
  • Have saving in the form of cash
  • Have to buy to let properties for a minimum of 24 months
  • Have a minimum deposit of 20%
 

Don’t worry if you haven’t got all of the above, we can still secure lending for you. We are on the panels of most lenders and here at Revolution Finance Brokers, we pride ourselves in giving the personal touch and promoting the lender which is right for your needs.

Give us a call and one of our experts carefully assess your circumstances.

Does your property need to be tenanted?

It is always good to have tenants in your commercial property as this is seen as preferential by lenders, you should also have at least 2 years left on a standard FRI lease. Sometimes, vacant units can be considered – in the case, lenders can offer up to 80% LTV on a 180-day valuation, i.e. the opinion of a value on what the sale price would be if the property were to be sold quickly e.g within six months.

What kind of costs are involved?

Unlike buy to let mortgages there are no standard rates, commercial mortgages are priced individually to meet the strength of the proposal. The rate you are likely to receive is dependent on the following:

  1. Industry sector experience,  
  2. The property itself,
  3. The quality of the tenant
  4. The length of the lease.

At the moment, some high-street lenders are offering anywhere between 3.25-4.25% over the base (Bank Rate currently 0.75%, variable) on capital and repayment terms only. Also expect to pay 1-2% in arrangement fees, although interestingly, many no longer insist that you also do your business banking with them.

For those of you looking for interest only terms, the specialist lenders are a better bet and are offering up to 10 years’ interest only, with pricing in the region of 4-5.5% over base rate and fees can expect to pay are around 1.5-2%.

At Revolution Finance Brokers we have the ability secured lending for applicants that have had previous adverse credit data as we have demonstrated with past clients. We are independent brokers, our affiliation is with no one lender, our advice is based on your needs.

Before we speak to any lenders will we fully understand your situation and based upon that we will secure the best possible products, at the best possible rates.

Contact us now to discuss your personal options, Revolution Finance Brokers specialise in commercial and residential finance in Essex, Kent, London and Hertfordshire.

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Almas Uddin

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FCA disclaimer

The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature. We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.