About the Market Place
 In commercial owner occupier mortgages market the
borrower is purchasing property as a business premises.
The commercial mortgage market is characterised by complexities not
present in the Residential and Buy to Let markets. The market in
general does not feature the dynamic and highly competitive price
points seen in the domestic market; however there are increasing
numbers of lenders offering tranches of fixed rate money for small
and medium sized loans.
Unlike the tick box and simple calculation approach employed in the
domestic market to make lending decisions, the commercial market is
based around complex pricing models and the verdict of lending
panels at each individual institution. All lenders, above a certain
minimum loan value (normally £500,000), will go to the money
markets and price up a transaction based on a bespoke margin and
SWAP rate price (the rate banks and building societies lend each
other money).
In simple terms, loan to property values for commercial owner
occupier mortgages are dependent on industry sector and by the
business' and individual's business track record. In general
however for small or medium sized loans a good yardstick for the
borrower to consider would be an approximate maximum loan to value
of 75%; however certain lenders will offer 80%+ loan to value in
some cases.
The length of a commercial mortgage loan period will tend to be a
maximum of 25 years.
Borrowers should also be aware of the fees in the commercial
mortgage market; typically there will a lender fee of 1% and a more
expensive commercial valuation than would be applicable to a
similarly valued residential property. Given the nature of the
complexity of titles and covenants on many commercial properties, a
higher legal cost will be incurred, not only through the borrower's
own solicitor, but in many instances the lender uses their
solicitor in parallel to validate the quality of the work, this
cost also needs to be factored in.
The value of a broker within this field cannot be overstated, due
to the bespoke nature of every single commercial mortgage
transaction. Commercial mortgage terms are not set in stone and the
broker's role in the transaction is to negotiate the best rate and
terms. Furthermore the broker's market knowledge means he is
acutely aware of what is achievable for his client given a specific
circumstance.
To view an independent guide to commercial owner occupier mortgages
if you need further advice you may to visit the Business Link - commercial mortgage guide
Also can also cater for all your
commercial property insurance broker needs, in our property
insurance department
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