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Commercial Property Finance

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A commercial mortgage works like a residential mortgage, except the it is a mortgage for a commercial building not residential property. Also instead of an individual borrower a commercial mortgage is taken on by the business.. The borrower could be a partnership, incorporated business or limited company so the creditworthiness is based on the business.

Businesses usually take out ommercial mortgage loans for acquiring land or commercial properties, expanding existing facilities or refinancing existing debt. Commercial property finance can be arranged for any specific purpose:

  • Part of a large funding requirement like management buy out or a corporate acquisition
  • Refinance or Rebanking
  • Development finance
  • Short term bridging finance
  • Buy to let investment
  • Buying a property: factories and offices, warehousing, storage hotels, pubs, restaurants, shops, retail premises and more

There are two interest rate options for you to consider:

Fixed Rate: A fixed interest rate is set on a mortgage for an agreed period of time. The benefit of a fixed rate mortgage is, if interest rates were to rise above the set interest rate then you still pay only the set rate and no higher. The disadvantage is should interest rates fall below the set rate you would still have to pay the set rate and nothing lower.

Variable Interest Rate: A variable base rate is a level of interest charged by lenders that depending on current market conditions can go up or down. A rise in interest rates could mean that you would struggle to make repayments. The best tactic is not to borrow to your limit but at a level where you could cope with fluctuations in interest rates.

The most common commercial mortgage is a fixed-rate loan, where the interest rate remains constant throughout the term. These loans are typically based on treasuries or swaps. Loans can also be variable or capped. These rates are usually based on an index such as LIBOR or prime.

Property Development Finance

Property development finance can be for Property developers, Private Builders or Self build projects. In most cases a higher level of loan to value can be obtained from such specialist lenders than can be obtained from traditional high street banks. There are lenders who after examining all criteria will consider lending 100% of the total development project.

Property Development Finance can be used for:

  • Commercial Development (Pre let or pre sold)
  • Residential development (New build, conversions, extentions)
  • Property Trading (Acquisition, refurb and onward sale)
  • Planning Gain Finance
  • Investment Portfolios