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Based on your yearly income,
you may be able to borrow
Most lenders will let you borrow 4.5 times your annual salary so, as long as you have a standard 10% deposit, you should be able to borrow this much.
Depending on your personal circumstances, some lenders may let you borrow 5 times your salary.
Lenders usually cap the amount they lend at 5.5 times your salary, so it’s unlikely you’ll be able to borrow more than this.
Commercial Mortgages for Bad Credit Borrowers
Bad credit is a problem for businesses as well as individuals, but it is possible to secure a commercial mortgage in most bad credit scenarios - provided you apply to the most appropriate lender!
Here we'll summarise the key factors in commercial bad credit borrowing, and what criteria a lender will consider in deciding whether to offer a mortgage.
Are There Business Mortgages for Bad Credit Applicants?
Indeed there are. You can find commercial mortgages for businesses with adverse credit history, or where the business owners or directors have credit issues.
The commercial lending sector is large, and so there are usually options even in severe bad credit scenarios. The key is always to consult an independent broker who can ensure you apply to the most suitable lender, and offer the most competitive rates available.
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Can I Get a Business Mortgage After a Default?
Defaults can be an issue, particularly if they happened within the last year. The older the defaults on your credit file, the more likely a lender is to overlook them.
However, bad credit issues will usually mean that you will be offered higher interest rates.
Are There Business Mortgages for Companies with a Repossession History?
Repossessions can be very serious, since they represent a past failure to keep up to date with mortgage repayments. It is unlikely that you'll find a commercial mortgage within 12 months of repossession, but longer term it can be possible with the help of a whole-of-market broker.
Can I Apply for a Commercial Mortgage with a Low Credit Score?
Yes, as long as you apply to a lender who is more focused on the performance of your finances than on the generic score assigned to your credit file.
How Can I Get a Business Mortgage with an Adverse Credit History?
It's worth remembering that commercial mortgages are far more flexible than residential. Therefore, you have greater scope for negotiation than if you were buying a home with a bad credit rating.
There are often steps you can take to mitigate the lender's risk. For example, offering a higher deposit, more security through another asset, or a director’s personal guarantee can all improve your chances of being approved for a commercial mortgage.
What are the Typical Lender Criteria for a Bad Credit Commercial Mortgage Application?
Lenders work on a risk assessment basis, and will review each application individually. If you meet the following criteria, you are likely to achieve better rates and more competitive borrowing terms:
- Profit margins are usually assessed through an EBITDA calculation - there isn't a specific cap or profit threshold, but if you make enough profit to comfortably repay the mortgage and any other debts, you are more likely to be approved.
- Most commercial lenders need a deposit of at least 20% to 40%. If you have adverse credit issues, then offering a higher deposit will lower the risk factor to the lender.
- The longer established the business is, the more confidence a mortgage lender will have, and the less impactful your bad credit issues will be.
- Business planning is also vital. If you can show thorough forecasts and projections, you will further lower the risk perception associated with your commercial mortgage application.
Do I Need to Apply to a Non-Status Business Mortgage Provider?
We wouldn't recommend it unless as a last resort and if all other lines of enquiry have failed. Non-status commercial loans are unusual, and often charge very high interest rates with low LTV caps, so tend to only be used in very severe credit scenarios.
Expert Advice on Bad Credit Commercial Mortgages
If you're interested in applying for a commercial mortgage but are concerned about your credit rating, or have been rejected elsewhere, get in touch with the Revolution Brokers team.
We are independent, whole-of-market experts with extensive experience in negotiating commercial mortgages in almost any scenario, including bad debt situations.
Give the team a call on 0330 304 3040, or email us at [email protected] to arrange a good time to talk.
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As specialist mortgage brokers for a huge variety of applicants, the whole-of-market consultants at Revolution provide access to an exceptional range of lenders, products and mortgage deals. That means you get the advantage of professional negotiation and broker-exclusives through an established lending network to ensure we always find you the most competitive mortgage available.
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.