Commercial Loans

Commercial Loans

A commercial mortgage is a loan from a bank, building society or other specialist funding institute that is arranged for the purpose of purchasing or refinancing property that is primarily used for commercial or business use.

Commercial mortgages can be utilised for properties that businesses will trade from or as a way of purchasing an investment, such as a buy-to-let. They can be seen as a complex form of lending; therefore, knowledge of the industry is recommended when arranging a commercial loan

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Key Features

  • Up to 75% LTV
  • Up to 100% with additional security
  • Joint venture and equity available
  • Terms from 1 to 30 years

  • Credit profile – we accept CCJs and Defaults (even in the last 12 months)

  • Income types – employed, self-employed, temporary/zero-hour contracts, DWP benefits, pension

  • Adverse credit accepted
  • Rates from 3.5%
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Why Use a Commercial Mortgage
Broker?

Why use a Commercial Broker

 

Here at FinanceMe, we have an experienced team of brokers who work with a network of leading commercial mortgage lenders.

We know which lenders are the best fit for your business’ specific requirements and, aside from finding your business a competitive deal, we go the extra mile to ensure all parties involved are fully up-to-date with the progress of the deal. 

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How are we different

We offer all the usual perks of a commercial mortgage broker and are often able to access better deals than you would be offered if you approached the commercial mortgage lender directly. However, we don’t think this alone is enough.

Complete professionalism – it’s common for businesses to approach commercial mortgage lenders to then be left in the dark, none the wiser about the progress of their mortgage. We work differently. We ensure you are informed of each development as and when it happens, and keep in contact with your IFA, accountant and solicitor to ensure a seamless transaction

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Frequently Asked Questions

Types of commercial mortgages

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.

How do you pay interest on a commercial mortgage?

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.

What fees are involved?

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.

Eligibility and criteria

Eligibility and criteria

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

Eligibility and criteria

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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