The client approached us for help in obtaining a commercial business mortgage so that he could buy the long leasehold interest of his business premises.
He had been operating his café business from the London premises for three years paying rent of 40,000 a year.
The client also had previous experience working in a family café.
The business, however, had only just started making a profit in the last year which made it an unattractive investment to most lenders.
In addition, he only had a cash deposit of 25% which was also a sticking point with many lenders who often only lend to 60% loan to value.
We went to a mainstream bank who were willing to take account of the rent paid, the steady growth in turnover and profits during the build-up period.
They were willing to take an element of this into consideration when calculating the amount that they would lend.
The bank were also impressed with the client’s dedication to the success of the business and his knowledge of the trade. Here are the details of the deal.
Property value: £340,000
Loan amount: £255,000
Loan to value: 75%
Term: 15 years capital & interest repayment
Mortgage payment: £1,811 pcm
Lender arrangement fee: £5,108
Completion date: Est. June 2015
Consultant: Steve Bedford