Commercial mortgages are used to buy a variety of properties including but not limited to the following types of building:
- Factories & Warehouses
- Professional Practice Premises
- Hotels & Restaurants & Pubs
- Care Homes
- Commercial & Residential Investment Property
- House of Multiple Occupations (HMO’s)
- Retail & Commercial Units
The type of property you are buying will largely determine the lender, some lenders avoid certain sectors, for example, the high street banks do not favour hospitality and will only offer low loan-to-value mortgages for these borrowers. Other properties such as Care Homes are best placed with specialist lenders who offer more favourable rates to borrowers than the mainstream lenders.
HOW MUCH CAN I BORROW?
The deposit required by lenders varies on your industry sector, your experience in that industry and the affordability of your business to cover the mortgage repayments. Typical loan-to-value ratios for commercial loans are around 60-70% but there are some lenders who will take security on other properties as part of the deposit and so 100% mortgages are possible. Generally, higher loan-to-value loans attract a higher interest rate.
WHAT AFFORDABILITY CRITERION IS REQUIRED?
As a general rule, the profits of a business will need to cover at least 2-2.5 times the annual cost of the mortgage. For assessing affordability the business can add back certain expenses to the profit, such as depreciation and rents. Some lenders will consider business ‘forecasts’ so it is not always necessary to have +2 years of filed accounts to apply for a commercial mortgage.
We have lenders that will tailor-make a product to suit your particular circumstances. Such as a bridge-to-term product (useful for developers) or more flexibility built-in compared to typical mortgage products. There are a wide variety of mortgage options to choose from including:
- Repayment or Interest-only
- Second Charge
- Short & Long-term Repayment (3 – 30 years)
- Fixed & Variable Rates
- Up to 100% funding available where additional security is available