Simple Commercial Finance

The commercial mortgage market is very different to the Residential and Buy to Let (BTL) markets.

Whereas the latter, in general, is highly competitive and largely based on price, the Commercial Finance sector is much more "bespoke " and as such a business needs to carefully find it's way through the complex underwriting rules adopted by funders when considering a request for Commercial Borrowing.

In these difficult times the lenders remain very cautious in their deliberations and are very detailed in their due diligence ahead of making any decision.

The residential & BTL sector is reasonably simplistic in it's approach to the underwriting of lending decisions and is often based on the loan to value and multiples of income whereas the Commercial market is based around complex pricing and underwriting models and the involvement of credit committee's at each lender.

So whilst the business itself maybe straightforward the process of applying for finance is much more complex.

Whilst there are many factors that may influence the granting of a mortgage including the quality of the tenant/length of lease/type of property etc a good benchmark for the borrower to consider would be an approximate maximum loan to value of 70% - 75% with potentially higher being achievable from certain lenders in exceptional circumstances.

The typical term of a commercial mortgage loan period will tend to be a maximum of 30 years.

(To work out your own particular monthly mortgage repayments please use the commercial mortgage calculator.)

Borrowers should also be aware of the fees associated with an application for a commercial mortgage;

• Typically there will an arrangement fee (payable to the lender) lender fee of between 1-2% - this can in most circumstances be added onto the loan arranged.
• The commercial valuation is more detailed than would be applicable to a residential property and thus the corresponding fees will be higher albeit they will vary from lender to lender as in most cases they will instruct a valuer from a panel of firms selected to work on behalf of the lender.
• Given the complex nature of many commercial property transactions (e.g. - titles and covenants etc), a higher legal cost will be incurred, not only through the borrower's own solicitor, but in many instances the lender uses its own solicitor alongside the Borrowers to check the quality of the work, this cost also needs to be borne by the client.

The value of a broker within this field should not be underestimated, due to the bespoke nature of each commercial mortgage transaction and complex underwriting criteria which varies between the lenders, time and money can be saved by a business with the help of a good broker.

The broker will match the circumstances and needs of the business with the right lenders to achieve a positive result on the best terms thus saving the business owner or management team valuable time and money in sourcing the much needed finance required.

Simple Commercial Finance wish to "Helping Business" by supporting our customers at every stage of the application process from the initial enquiry through to completion of the deal and hopefully thereafter as a valued service to your business for many years to come. We are not restricted by the type or size of business we can help or the sectors in which the business operates and can provide finance on properties including;

• Offices/ Industrial units/ Factories/Warehouses
• Retail ( including shops with living accommodation above)
• Hotels, guest houses, holiday lets (including properties with occupancy restrictions)Pubs & restaurants
• Farms

And for the following purposes

• Commercial Investment
• Acquisition
• Remortgage
• New business start-ups
• Business turnaround solutions
• Short Term Finance and debt consolidation
• Working Capital raising
• Property improvement
• Business expansion

Our process is designed to be simple, flexible and most importantly geared towards your requirements

Mortgage products are typically available with terms of up to 30 years/generally up to 70 -75% LTV*/Interest rate margins of 2% - 5% (over Bank of England Base Rate/LIBOR or Lenders own lending base rate)/Arrangement fees of 1-2%/Interest Only periods can usually be arranged/Early redemption charges may apply

*We are able to arrange lending in excess of 75% of purchase price for sitting tenants purchasing at a discount (subject to this not exceeding any LTV restrictions on valuation) and 100% advances can be made with additional security from the borrower and subject to status.