Everything YOU need to know about commercial mortgages

Monday, 10th November, 2014

We’ve recently been inundated with applications for commercial mortgages, which leads us to believe two things:

1. Commercial mortgages are back in high demand
2. Word has got out about our experience in securing commercial mortgages for our clients

So, in order to share our knowledge and help you decide whether or not a commercial mortgage is for you, here are the top 5 commercial mortgage questions that we’re commonly asked.

Which lenders do you use?

All of them!  We are genuinely a whole of market broker with direct access to over 90 lenders.

Do commercial lenders offer interest only commercial mortgages for the full term of loan?

Most commercial lenders will offer an interest only period at the start of the loan. This will usually revert back to capital and interest for the remaining term, which is likely to be a maximum of between 15 – 20 years.

What if I find a commercial property at auction? How do I get finance?

You would usually have to pay 10 per cent there and then and then have 28 days to complete the purchase.  In this situation you may want to consider bridging loans. Here, you would typically seek bridging finance in the short-term and then arrange a commercial mortgage for the long term.

Is it possible to secure up to 100 per cent funding on development finance?

In some cases, yes.  Some lenders will lend up to 100 per cent of the build cost but you would typically need a deposit of around 60 per cent of the purchase price of the land.

Can we obtain a 100 per cent mortgage in order to acquire freehold business premises?

In a roundabout way, yes.  The maximum loan amount would typically be between 75 – 85 per cent of purchase price or valuation – generally the lower figure of the two.  To achieve a 100 per cent mortgage you would need suitable additional security such as a secondary property, providing there is enough equity available.