Commercial mortgages are designed for individuals and companies purchasing a business property as an asset; where the property is an investment profiting from rents and the investor is looking to enjoy the property value appreciating.
Typical examples of when a Commercial investment loan would apply would be Shopping Centres, Industrial Estates, Agricultural Land, Office Buildings, Restaurants, Hotels and mixed use properties.
On Commercial Investment Loans the lender looks at 4 main areas:-
- The calibre of the tenant, the length of the lease remaining, break clauses, whether the lease is fully repairing and insuring (FRI) amongst the most important. This determines the yield and thus the value of the asset.
- The security of the individual or company taking the loan out. A personal guarantee is often required as security for the lender for part of or all of the loan.
- The condition of the asset, it’s planning use and the intentions of the purchaser moving forward.
- The location of the asset, it’s surroundings and the future plans for the area.
Lending on these loans is typically set on a margin, the Bank’s profit above the Bank of England Base Rate(BOEBR), or the 3 month London Interbank Offer Rate(LIBOR) and loans are generally available up to 75% Loan-To-Value. Typical margins over BOEBR and LIBOR range from 2%-5%.
Commercial Loan Structure
Loans can be structured in many different ways; onshore, offshore, company name, LLP, trust or personal name. Funding is available from £50,000 to upwards of £100 million dependent on the project. Placing you together with the right Bank, who is sympathetic to your needs and requirements, is one of our many specialties.
Commercial mortgages are available by referral to a master broker only.
For more information on Commercial Finance, contact us on 020 8441 2605 or 01442 232 272, Alter natively click here for our enquiry form.