How to secure a long term Commercial Mortgage

15 Apr 2020

How to secure a long term Commercial Mortgage

Securing a Long-Term Commercial Mortgage 

Generally, mortgage offers to purchase a residential property come with terms of 25-30 years, but commercial mortgage terms tend to be much shorter at only 5-10 years. 

The mortgage products provided by commercial lenders are called committed facilities, which are calculated on a short-term loan basis but analysed for affordability based on the monthly repayments required over a longer repayment term of around 25 years. This identifies lower monthly repayments that most businesses will be better able to afford, and means that the lender can achieve their requisite debt service cover requirements.

Many business borrowers are not aware of the commitment period, and therefore have a shock at the end of the short-term loan period when the demand arrives for the outstanding balance!

Revolution Finance Brokers have experienced this scenario many times and would recommend at this stage to refinance and look around the market for the best offers. It is ideal to begin considering options before the end of the initial term, so if you are reaching this date then give us a call and we can start work now.

Choosing a Lender

Refinancing a Commercial Mortgage Through your Existing Lender

Most lenders offer incentives to keep your business with them:

  • Lower arrangement fees – remortgaging with the same lender usually carries lower fees, and we may even be able to negotiate zero arrangement fees
  • Valuation requirements – to remortgage an existing property, a new valuation may not be required
  • Additional fees – other costs such as legal or security fees are usually not necessary
  • Streamlined process – it is often quicker and easier to remortgage with the same lender 
 

Refinancing a Commercial Mortgage with a New Lender 

Comparing your remortgage offer with others on the market is always advisable – even if just to make sure you are getting a good deal! Other lenders might be able to offer:

  • Favourable terms – lending terms change over time, and even if your existing lender was the best option when the mortgage term began, there may now be other products available
  • Cost savings – although the initial fees may be lower to refinance with the same lender, you might be able to save more money by choosing a lower-cost long-term product 
 

How to Apply

If your business is having to consider refinancing its mortgage, is approaching the end of your committed facility period, or would like to check whether there are better deals available, give us a call today at 0330 304 3040.

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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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.