Growth in a business is exciting. New staff, new customers, new opportunities… but it’s complicated too… especially when you need more room. If buying a property to help expand your business is your best foot forward, we’ve got the expertise to help.
When you’re in charge, the buck stops with you. Profitability. Turnover. Staff. Facilities. It’s all your fault or your opportunity… but you can’t be an expert at everything can you?
Finding new premises or expanding your physical presence can be daunting, especially when it comes to finding the right way to finance it.
We know what it’s like, because it’s something our own growing business faces, and that’s why we like to think we know the challenges you’re facing… and can take away some of the stress.
So whether you’re looking to purchase a new sales location, more storage space, room for the new sales team, or just somewhere to put new equipment, our experts can find the right deal for you – always understanding it’s not just about the money, it’s what the money will be used for.
Common Questions about Commercial Mortgages
No matter if it’s your first time, or you’re looking to grow your portfolio, it’s good to know some of the areas that need extra focus.
As such, here are several of those questions we get asked all the time about Commercial mortgages, to give you some background on the best route forward.
Can I get a loan on a new or my existing business premises?
Loans can be arranged on all types of premises including:
- Offices, warehouse and industrial premises.
- Residential and Commercial Mortgages for Property Development and Refurbishment.
- Commercial Mortgages for Nursing / Care Homes and Day Nurseries.
- Professional landlord, Buy to Let mortgages and portfolio consolidation / equity release.
- Commercial Mortgages for High Street Retail premises, semi-commercial, shops, take-aways.
- Pubs, clubs, hotels, restaurants, cafes and other licensed premises.
- Farms, equestrian and agricultural units.
- Leisure Facilities – health clubs, gyms, caravan sites, golf courses etc.
- Leasehold Purchases
- Asset Finance
- Investment properties
Is a commercial mortgage the right route for me?
As the name suggest, commercial mortgage is for premises used for business purpose either as owner occupied trading concern or investment. If your loan requirement falls within this category then commercial mortgage is the route for you.
Asset + can advise on a range of secure loan finance including further advances from you existing lender, second charge borrowing, or a new first charge mortgage. We do not offer unsecured lending. By talking through your plans and requirements with our advisers, they can find the best route or your own individual circumstances.
What are the costs involved?
There are a number of costs involved in commercial lending:
Arrangement fees are typically 1% -2% of the loan amount for loans up to £1 million, with the smaller loans getting the higher rates.
Commercial properties can be more diverse than residential ones, so a valuer will be required to visit the property and write a 20-30 page report about it to the lender. The cost can start at around £500 for a simple case, but again because of variety are not done on a fixed price but from a bespoke quotation. This is payable to the lender after an initial indicative offer has been accepted.
You will be required to pay both your own legal fees and those of the lender. Again because of the variety of property legal fees will vary with complexity, but start at around £500 for each party.
Where can I compare lenders rates?
The rates charged for commercial mortgages and business loans are not pre-determined like personal loans usually are. In each and every case when an application is made for a commercial mortgage a lending manager looks at it carefully to assess the risk level in making the proposed loan. A great deal of information is required for this decision. The lending manager will vary the rate offered to take account of the riskiness of the loan.
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 also available. Rather than shopping around, by talking to our experts at Asset +, they can do the leg work for you and find the best option for your own personal circumstances.
Typically commercial or business rates range from c. 2.5% to c. 5% depending on factors like industry sector, level of security and business strength, etc. At Asset + we have access to range of lenders and can source either variable or fixed rate to suit your personal and business circumstances.
How much can I borrow?
Funding of up to 85% is available in some circumstances but typically more lenders would consider a loan to value of up to 70-75%
Level of borrowing will depend on industry sector, level of security and affordability. Typically lenders would advance up to 70% – 75% on purchase of freehold businesses. This tend to be around 50% on purchase of leasehold business. Businesses like GP practices and pharmacies can attract loan up to 100% of purchase price. At Asset + we can structure the deal the suit your budget requirements.
How will I be assessed for affordability on a commercial mortgage?
Full financial information about the business will be required, with typically three years of published accounts as well as information about the background of both the firm and its owners.
What term can I pay it over?
Commercial mortgages are typically from 3 to 25 years. Shorter term finance is also available and this may be called a bridging loan or property development loan, which you may have from a few weeks up to 24 months.
Our experts can conduct the financial assessment on your business and advise you on loan terms that can be arranged.
Can I rent my premises to another business?
The property against which the mortgage is being secured may be used directly by the business or, as with a residential buy-to-let mortgage, it could be an investment property that is to be let to other firms.
You are likely to need a higher deposit as maximum loan to value for investment properties are typically 65%. In addition the maximum amount you can borrow will be determined by the rental income generated.
Should I remortgage my commercial loan?
Refinancing a commercial mortgage may be an attractive option to try and get a lower interest rate, which would reduce your monthly repayments.
In addition, refinancing could also enable you to access any equity tied up in your commercial property, freeing up working capital that could be put towards new business projects, equipment purchases and other ventures to facilitate growth.
However there will be cost involved in remortgaging so it pays to discuss this with our expert advisers who will assess whether the savings outweigh the costs before you commit to re-mortgaging.
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About Asset Plus
We are Experts – we know the market and the people we serve. We are Bespoke – every person and circumstance is unique – and needs to be treated as such. We are Transparent – we keep you informed every step of the way. We are Accessible – we’re approachable, local & friendly, and look to build great relationships with our customers – not keep them at arms length through call centres and anonymous communication. We are Invested – it’s about knowing that there is a bigger story, understanding what it is, and helping you achieve your dream. We are more than just an Asset – because we know it’s about more than just the money...
asset plus+ Mortgage Solutions is a trading style of asset plus+ Financial Ltd, an appointed representative of The Right Mortgage Limited, which is authorised and regulated by the Financial Conduct Authority. asset plus+ Financial Ltd is registered in England no: 05859399. Registered Address: Umpleby Accountancy, Basepoint Business Centre, Bridge Road, Haywards Heath, West Sussex RH16 1UA.
There will be a completion fee for advice. The precise amount will depend upon your circumstances but we estimate that it will be £300.
Your property may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.
Some forms of commercial mortgages are not regulated by the Financial Conduct Authority.
The information contained in this website is subject to UK regulatory regime and is therefore intended for consumers based in the UK.