Commercial Mortgages Broker and Business Mortgage Rates
Competitive Interest Rates from 2.2% Above Base Rate up to 80% LTV on a Single Property
Outline of Lending for Owner-Occupied Commercial
If you’re buying a commercial property to rent out or need to refinance we can arrange lending on a wide range of properties.
Including retail units with or without living accommodation, residential investments, industrial units, offices, warehousing & storage facilities, and licensed HMOs and purpose built student accommodation.
Commercial Owner Occupied Business Mortgages
Mortgages for Semi-Commercial Property
Properties that contain both residential living accommodation and an element of commercial or business usage are classed as semi-commercial.
Semi-commercial can also be for investment purposes or for owner occupation. An example owner occupied semi-commercial would be a Bed & Breakfast or small hotel where the property owners both reside at and conduct business from the address.
A retail shop with a residential flat above with both units rented out would, on the other hand, be classed as investment semi-commercial.
What can be Offered as Security for the Commercial Mortgage?
When purchasing a commercial property the mortgage is secured against the property being purchased by first legal charge.
Loan to value ratio’s (LTV) of commercial borrowing will vary on property type and business sector though generally LTV’s are in the region of 55% to 80% with the balance being provided for by cash deposit or through offering additional security in other property that you hold sufficient equity.
Where additional security can be offered it is therefore possible to attain the equivalent of 100% LTV or loan-to-purchase.
Mortgages for Commercial Premises or Property Aspected by Business Trade or Income
A commercial mortgage is a loan secured by commercial or business property which is not the applicants main residence.
Office buildings, industrial warehousing and retail shop units are common examples of commercial property.
Commercial mortgages can be categorised as being either for investment purposes, where the property is let to a tenant and producing rental income, or the property is to be used for the owners place of business as a owner occupied property.
Commercial Mortgage Loan to Value Ratio
Commercial mortgages, unlike residential buy to let products, are priced on individual merits on a case by case basis, often with many variable factors affecting lending risk, it is not possible to produce tables of best-buy interest rates.
As a commercial mortgage broker, we work with our clients to position their requirements in the best way before approaching our panel of commercial lenders. Commercial lenders will assess a case on a number of critical factors. The most ?? being type and condition of property, the strength of the business behind the application, and for investment commercial, the terms of any rent producing tenants and the type of tenant renting the property.
Lenders will also require a minimum debt service coverage ratio which is the differential between the income produced by the property to the mortgage payment.
Commercial Lending on Residential Sector Property
Commercial lending extends to cover not just commercial or business property but also residential use accommodation such as apartment blocks and other constructions of housing under the C3 planning order for dwellinghouses.
Unlike a residential mortgage which only permits residential (main residence) owner-occupation. Residential use assets financed under a commercial loan allows the owner to rent the home to any other non-family members of the owner as a ’Buy to let’ investment.
Commercial lending will be used in place of mainstream buy to let where lending criteria does not have scope for the needs of a professional or corporate investor.
Regulated Commercial Mortgage Contracts
Most Commercial mortgages are not regulated by the Financial Conduct Authority (FCA). However in properties where at least 40% of the property (by total area) will be used exclusively as the borrower’s main residence, the mortgage contract must then be regulated by the FCA.
Because of this the vast majority of commercial lenders do not lend on property with owners living accommodation forming more than 40% of the floor area.
Many smaller B&B’s, guesthouses will fall under this regulation, likewise cattery & kennels businesses with a main residence house plus outbuildings for the business use will also require a FCA regulated mortgage contract.