If you decide to buy a property for your business, you will probably need a commercial mortgage. Some banks and building societies offer commercial mortgages on commercial property or buy to let portfolio's, however approaching a bank that does not specialise in commercial finance can waste a lot of time.
At Authentic Mortgages, we understand the ups and downs of business and pride ourselfs on having a quick understanding of your business and any accounting information that you provide. Lenders criteria can vary massively and it changes on a daily basis, this makes it difficult not only to gain commercial finance but also to ensure that you have the best deal available to you. We have established relationships with key people within all of the major lending institutions which allows us to quickly source the best commercial mortgage deal based on your circumstances. After all, when you start or expand a business, one of your main priorities will be to keep your costs to a minimum.
Although our head office is based in Earlsfield, South West London, we can provide commercial mortgage advice on any transaction within the UK.
Advantages to buying business premises:
- Your mortgage repayment is likely to be similar to a rental payment on the same property.
- You aren’t exposed to any sudden rent increases.
- Interest payments on a commercial mortgage are tax deductable.
- Any gain in the value of your property will increase your capital.
An overview of Commercial Mortgages:
Most lenders require a positive personal credit rating, although some lenders may accept applications when there has been adverse credit. Most lenders will apply a ‘loan to value’ calculation and will expect you to invest a proportion of your own money. The more you are willing to invest of your own money, the greater the chance you will have of securing a loan for the remainder. Generally a lender will fund 75% of the properties value.
The lenders decision will also depend upon your current business circumstances, a commercial lender will expect your business to be stable and profitable or if it’s a new business, expect you to have relevant background experience for the industry you are entering. They may ask to see a business plan, personal bank statements, business bank statements, a profit and loss forecast, asset and liability statements, business accounts and a CV.
Commercial mortgages may carry higher interest rates than residential loans because you are considered higher risk. The term of a commercial mortgage will typically be between ten and 20 years. Rates are usually set between 1 and 6% above the Bank of England base rate, because Authentic Mortgages are an Independent Commercial Mortgage Broker, we will shop around to obtain the best deal based on your circumstances. Other fees and costs include:
- Arrangement and processing fees: these are fees that your lender charges for arranging your mortgage. A typical fee might be in the region of 0.5 - 1.5% of the loan and is usually negotiable.
- Valuation fee: this is a fee charged by the lender for carrying out the valuation of the property and can vary according to the lender.
- Legal and professional fees: these can include insurance, site surveys and preparation of legal documents.
Authentic Mortgages are an Independent Commercial Mortgage Broker based in South London. We are not tied to any one lender and have access to the whole mortgage market. We work for you, not the lender! Although we are based in South London, appointments can be arranged with a specialist commercial advisor anywhere in the UK.
It’s important for small businesses to get the right kind of finance at the best price. With our specialist market knowledge, we can save you a lot of time and money.
Commercial Mortgages are not regulated by the Financial Services Authority.